Final Thesis Aegeelhoed

The Role of Sustainability in Business Model
Innovation of Start-ups in Indonesia

Multiple Case-study Design
Anne Evita Geelhoed
Management of Technology Master Thesis
Delft - 31 August 2017
THE ROLE OF SUSTAINABILITY IN BUSINESS MODEL INNOVATION FOR STARTUPS - AE GEELHOED

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The Role of Sustainability in Business Model Innovation of Start-ups in Indonesia – A.E. Geelhoed 2
The Role of Sustainability in Business
Model Innovation of Start-ups in
Indonesia
Multiple Case-study Design
By
Anne Evita Geelhoed
In partial fulfilment of the requirements for the degree of
Master of Science
in Management of Technology
at Faculty of Technology, Policy and Management, Delft University of Technology,

to be defended publicly on Thursday August 31st, 2017 at 02.00 PM.
Keywords: Business Model, Business Model Innovation, Environmental Sustainability, Start-Up,

Entrepreneurship
Graduation Committee
Chairperson: Prof. C. van Beers Economics, Technology and Innovation

First Supervisor: Prof. Dr. W.A.G.A. Bouwman Information and Communication
Technology
Second Supervisor: DR. L.M. Kamp Energy and Industry
An electronic version of this thesis is available at https://repository.tudelft.nl/.
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Acknowledgement
This part is dedicated to the people that have continuously supported me during the execution of the
final part of my degree, Management of Technology. At the start of this degree in September 2015, I
had no idea what the topic of my master thesis would be, as most of the topics would be new to me.
Waste management, environmental sustainability and process efficiency were interests that guided my
journey through the second year of the education. But most of all, my desire to explore yet another area
before I would start my professional career. It was because of my meetings with miss Melia Famiola
that the focus of my thesis became clear, after finding common academic interest, she provided me the
essential resources for conducting this research. It has been a privilege to work together with her
throughout the process and Mr. Leo Aldianto who also has given me the opportunity to come by his
office to exchange thoughts whenever I needed. Moreover, I want to give my gratitude the Institut
Teknologi Bandung for having me and allowing me to extend my stay for the execution of my thesis
project.
I would like to take this opportunity to thank the members of my committee in Delft, that have enabled
me to finalize my degree. Special gratitude goes out to my first supervisor professor Harry Bouwman,
who has consistently supported me throughout the project at times that I was not sure on how to
continue; allowing this paper to be my own work and steering me when necessary, thank you! Thank
you to professor Cees Van Beers who enabled this thesis by chairing the committee. Thank you to Dr.
Linda Kamp, who’s participation and feedback on this thesis is highly valued.
I would also like to thank the interviewees and founders of the Start-ups for their cooperation, interest
and time, despite their busy schedules. Thank you to Gibran, Reynazran, Mustika, Malik and Hagorly,
as well as the management of the LPiK incubator of ITB. Without your input this thesis would not have
been successful.
Nevertheless, I am greatly indebted to the social support that surrounded me during my thesis. At times
it has been an isolated project, persistence and commitment was required. A special thanks to my
boyfriend Andra who has supported me with love during the most stressful periods. Thank you to Jara
for being such a close friend and to Delvia who was always there for the much needed leisure. Although
the greatest part of the thesis was conducted in Indonesia, I would not have finished without the support
of my amazing friend group in Delft. Thank you so much, Zeynep, Darija, Anthi, Thanos and Simone
for the tremendous support, as well in the first year as in the last months of writing this thesis.
Last but not least, I want to express my gratitude to my most beloved family, who have always been
there for me throughout my academic years and life in general. I want to thank my mother Willemien,
my father Jan, my brother Jelle and my sister Yara for their consistent love and support. Thank you for
being so understanding when times were harder, and for providing me with the humor that enlightened
my days.
Anne Geelhoed
Delft, August 2017
5
Executive summary
In the last two decades, awareness for the need of sustainable progress has been widely developed and
encouraged. The environmental awareness in business practices has grown to be a central issue in
corporate social responsibility for many multinational companies. Unfortunately, it remains a way of
brand management for many companies, rather than a drive for structural change in business practices.
Customers demand the change to a sustainable business environment. This leads to a change in the
economical paradigm, from traditional consumerism towards a more environmental friendly approach.
A widespread sustainability movement has compelled companies to be more innovative regarding
solutions on how to save the environment, while they are simultaneously pressured to develop
competitive advantage from these actions. This can be an opportunity for start-ups to include
sustainability in the firms’ practices from the start. Delivering environmental sustainability through
business model innovations may provide a holistic approach to deal with changing customer demands.
Business models should therefore be reshaped, to deliver environmental sustainability based on the core
logic of a firm.
While previous studies are concerned with the typological and antecedent factor of start-ups’
environmental orientation, this study seeks to explore how start-ups incorporate their environmental
orientation into their business model and (re)design their business model to respond to changing market
demand for ecological sustainable solutions. The scope of this research is to discover practices of start-
ups that are beneficial to the environment. A comparison between start-ups with different foci on
sustainability based on a multiple case study is used to identify similarities and differences in order to
enhance the learning process. The thesis consists of a literature study, combining literature on business
model innovation, business models for sustainability and start-ups. Followed by four in-depth case
studies to clarify contemporary practices on sustainability. To identify the sustainability elements that
are currently employed by technology start-ups in Indonesia, four case studies have been performed. In
this cross case comparison explicit attention is paid to the nature of the innovations regarding
sustainability.
Through literature review, an important distinction is made between sustainability practices that are
innovating the business model as a whole (e.g. architectural innovations) and sustainability practices
that are affecting single components of the business model (e.g. modular innovations). It is argued that
environmental sustainability can position itself within the architecture of a business model, influencing
all business decisions, or environmental sustainability can position itself outside of the business model,
allowing for modular business model innovations. In order to alleviate the whole business model to be
sustainable, a company should take a stakeholder view over a shareholder view to transcend economic
incentives. Based on previous identified sustainable business models, combined with the characteristics
of start-ups, four sustainability practices have been proposed that can be adopted by start-ups.
Sustainable value creators: 1) Collaboration on sustainable initiatives, 2) by-product exchange, 3) eco-
efficiency; and Sustainable revenue creators: 4) Sustainable branding. Implementing one of these
practices results in a component based innovation of the business model. However, creative
combination of sustainable value creators with sustainable revenue creators is likely to provide the best
results in terms of economic and environmental sustainability.
The aim of the thesis is to explore the role of environmental sustainability for business model innovation
of start-ups within Indonesia. To identify current practices of technology related start-ups, a multiple
case study design has been set up as depicted in Table A. Two start-ups that are in the process of
designing their initial business model are selected, one company that has ecological sustainability
embedded in the design of the product, and one that is focused on other, mainly economic brand related,
values to remain competitive. Also two start-ups that have already commercialized their product and
thus have an established business model are scrutinized. Again, one company that has ecological
sustainability embedded in the design of the product, and one that is focused on other, mainly economic
brand related, values to remain competitive. The research design allows for cross case comparison on
the different axes whilst aggregated data may reveal more general approaches towards environmental
sustainability.
Table A: Case Selection
Value dimension
Sustainability values Economic-, brand-related
Development phase values
Initial development start-up 1) <Case 1> 2) <Case 2>
Commercialized products 3) <Case 3> 4) <Case 4>
Due to limited access to extensive data that described the processes of the business model innovations,
the business model innovations of the start-ups have been studied as outcomes. All four cases were
found to consider the environment in their business model to a certain degree. Seven sustainability
practices have emerged from the aggregated data and is linked to business model components. Five
forms of eco-efficiency: external waste reduction, internal waste reduction, life cycle analysis, usage of
renewable energies and positioning the office on a strategic location. Additionally, stimulating
beneficial employee behavior and using environmental sustainability as mean of branding have been
identified. However, the position of environmental sustainability in the business model of the cases
differed for the different value dimensions. It has been found that, however space for improvement, the
cases on the sustainable value dimension did place environmental sustainability within the architecture
of their business model, considering the environment from the core logic of their business and affecting
to a certain extent the interdependencies of the subsystems. The cases on the economic, brand related
dimension showed to position environmental sustainability outside of the architecture of their business,
not regarding the natural environment as a stakeholder. Consequently, they merely allowed modular
business model innovations regarding environmental sustainable practices. However progressive, the
ecological orientation of the cases on the sustainable value dimension can be said to eco-open rather
than eco-dedicated, whilst the ecological orientation of <Case 2> and <Case 4> are to be placed on the
spectrum between eco-open and eco-reluctant.
This thesis has a unique contribution to academia and practitioners. From a scientific point of view, it
is unifying three literature streams that are fairly scattered by itself. Namely the abstract literature on
business models and business model innovation, literature on environmentally sustainable practices
through the business model and start-up characteristics. Identification of practices from start-ups on
sustainability has not been presented in academia before. Moreover, practitioners and entrepreneurs
may take inspiration of the demonstrated practices. Guidelines for engaging in sustainable business
model innovations can be extracted and performed.
7
Table of Contents
Acknowledgement 5
Executive summary 6
Chapter 1. Introduction 11
1.1. Introduction 11
1.2. Research problem 11
1.3. Research objectives and expected deliverables 14
1.4. Research Questions 14
1.5. Research approach 16
1.6. Structure of this thesis 18
Chapter 2. Theoretical background 20
2.1. Literature review on Business model and Business model innovation 20
2.1.1. Introduction 20
2.1.2. Business models and business model innovation for technology firms 21
2.1.3. Business model tooling: connecting the theory to the practitioner 23
2.1.4. Conclusion 24
2.2. Literature review on business models for sustainability 26
2.2.2. Business models for sustainability 26
2.2.3. Drivers and barriers towards implementing sustainable business models 29
2.3. Bringing sustainability into the business models of start-ups 33
2.3.2. Connecting the sustainability start-up literature 33
2.3.3. Ways of bringing sustainability into the business models of start-ups 35
Chapter 3. Context analysis: Environmental Sustainability in Indonesia 39
3.2. Environmental awareness in Indonesia 40
3.3. Social culture 40
3.4. System-wide factors: legislative and institutional environment 41
3.5. Conclusion 42
Chapter 4. Chapter 4 – Methodology 43
4.2. Research design 43
4.3. Data collection and reporting of the individual case studies 46
4.4. Coding approach of the interviews 48
Chapter 5. Analysis and Results 50
5.2. Description of the cases 50
5.2.1. <Case 1> 50
5.2.2. <Case 2> 52
5.2.3. <Case 3> 54
5.2.4. <Case 4> 57
5.3. Cross-case analysis, comparison on both axes 58
5.3.1. Analyzing the aggregated data 62
5.3.2. Intermezzo on the four cases 67
5.4. Conclusion 69
Chapter 6. Findings and discussion 70
6.2. Findings 70
6.3. Discussion 73
6.4. Practical implications 74
6.5. Limitations 75
6.6. Future research 76
Chapter 7. References 78
APPENDICES 83
APPENDIX A – Tables on the contribution of literature to business models of sustainability 83
APPENDIX B – Questionnaire 85
APPENDIX C – Interview protocol 86
Explanation of study 86
Criteria for selection of cases (smart sampling) 87
Confidentiality statement 88
Interview Guideline 89
APPENDIX D – Headlines of Interviews 91
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LIST OF FIGURES
FIGURE 1 RESEARCH FRAMEWORK ............................................................................................................. 16
FIGURE 2 FLOW OF THESIS ............................................................................................................................. 19
FIGURE 3 BUSINESS MODEL INNOVATION TYPOLOGY (FOSS & SAEBI, 2017) .................................. 22
FIGURE 4 ARCHETYPES FOR BMFS AS DEVELOPED BY BOCKEN ET AL. (2014) ............................... 28
FIGURE 5 IDENTIFIED INTERNAL DRIVERS (SCHALTEGGER ET AL. 2012) ......................................... 30
FIGURE 6 IDENTIFIED BARRIERS (LAUKKANEN & PATALA, 2014) ....................................................... 31
FIGURE 7 IDEAS FOR THE IMPLEMENTATION OF BMFS FOR START-UPS IN INDONESIA .............. 36
FIGURE 8 RELATIONSHIPS BETWEEN IDENTIFIED SUSTAINABLE PRACTICES AND THEIR
RELATIONSHIPS (LCA: LIFE CYCLE ANALYSIS) ............................................................................... 63
FIGURE 9 IDENTIFIED SUSTAINABLE PRACTICES LINKED WITH BUSINESS MODEL
COMPONENTS OVER FOUR CASES (LCA: LIFE CYCLE ANALYSIS) ............................................. 64
FIGURE 10 RELATIONSHIPS BETWEEN SUSTAINABLE PRACTICES, BUSINESS MODEL
COMPONENTS AND OPPORTUNITIES AND CHALLENGES (LCA: LIFE CYCLE ANALYSIS) .... 66
FIGURE 11 BARRIERS IDENTIFIED BY START-UPS ................................................................................... 67
LIST OF TABLES
TABLE 1 STEPS UNDERTAKEN IN THIS THESIS ......................................................................................... 17
TABLE 2 DIMENSIONS OF SELECTED CASE STUDIES .............................................................................. 18
TABLE 3: IDENTIFIED APPROACHES TO BM DEVELOPMENT (EURICH ET AL., 2013) ...................... 24
TABLE 4 CONTRIBUTION TO ENVIRONMENTAL SUSTAINABILITY AND SCOPE OF THE BMI ...... 29
TABLE 5 STEPS UNDERTAKEN IN THIS RESEARCH ELABORATED FROM STEP 3 ............................ 43
TABLE 6 CROSS CASE MATRIX SHOWING VALUE DIMENSION AND DEVELOPMENT PHASE
DIMENSION FOR RESPECTIVE COMPANIES....................................................................................... 46
TABLE 7 RESEARCH SHEET ON CASE STUDIES ......................................................................................... 47
TABLE 8 CODES USED TO ANALYZE INTERVIEWS .................................................................................. 48
TABLE 9 BUSINESS MODEL <CASE 1>, WITH GREEN BLOCKS REPRESENTING BMI FOR
ENVIRONMENTAL SUSTAINABILITY .................................................................................................. 52
TABLE 10 BUSINESS MODEL OF <CASE 2>, WITH GREEN BLOCKS REPRESENTING BMI FOR
ENVIRONMENTAL SUSTAINABILITY .................................................................................................. 54
TABLE 11 BUSINESS MODEL COMPONENTS <CASE 3>, WITH GREEN BLOCKS REPRESENTING
BMI FOR ENVIRONMENTAL SUSTAINABILITY ................................................................................. 56
TABLE 12 BUSINESS MODEL OF <CASE 4> .................................................................................................. 58
TABLE 13 COMPARISON BUSINESS MODEL OF <CASE 1> AND <CASE 3>, WITH GREEN BLOCKS
REPRESENTING BMI FOR ENVIRONMENTAL SUSTAINABILITY .................................................. 60
TABLE 14 WORDS SPOKEN BY EACH COMPANY ABOUT ENVIRONMENTAL FRIENDLY
PRACTICES ................................................................................................................................................. 62
TABLE 15: 2X2 MATRIX FOR CASE SELECTION ......................................................................................... 86
Chapter 1. Introduction
1.1. Introduction
In the last two decades, awareness for the need of sustainable progress has been widely developed and
encouraged (Keiner 2006). The environmental awareness in business practices has grown to be a central
issue in corporate social responsibility for many multinational companies (Birkinshaw 1996;
Chapple & Moon, J. 2005; Barin Cruz & Avila Pedrozo 2009). Unfortunately, it remains a way of
brand management for many companies, rather than a drive for structural change in business practices
(Schepers 2006; Sundaram & Black 1992; Weyzig 2009). Nevertheless, changing customers’
preferences is demanding the change to a sustainable business environment (Baskin 2006; Miles &
Covin 2000). This causes a change in the economical paradigm, from a traditional consumerism towards
a more environmental friendly approach.
The widespread sustainability movement has compelled companies to be more innovative regarding
solutions on how to save the environment, while they are simultaneously pressured to develop
competitive advantage from these actions (Gilding et al. 2002). For start-ups, this should be a promising
opportunity to incorporate sustainable business concerns into their business plan from the beginning of
their establishment (Schick 2002). Schick (2002) describes three different ways of start-up’s ecological
orientation: eco-dedicated, eco-open and eco-reluctant. The differences are caused by factors such as
the founder’s business orientation, start-up’s business advisers and the level of environmental
information available for the owners.
While Schick (2002) concerns the typological and antecedent factor of start-ups’ environmental
orientation, this study seeks to explore further how start-ups incorporate their environmental orientation
into their business model and (re)design their business model to respond to changing market demand
for ecological sustainable solutions. The scope of this research is to discover practices of start-ups that
are beneficial to the environment, so as to provide a clear boundary for the paper. A comparison between
start-ups with different foci on sustainability based on a multiple case study is used to identify
similarities and differences in order to enhance the learning process.
The structure of this chapter will have the following order: First, the research problem is clarified, as
well as the current state-of-art of knowledge shall be highlighted. After that, the research objectives are
presented, followed by the research questions. Finally, the research approach and the structure of this
thesis is explained.
1.2. Research problem

Social relevance
Sustainability is gaining ever increasing importance as the issue is becoming more pressing by
international agreements and changing consumers’ awareness (Cooperrider 2008). Business model
design and innovation can provide companies a competitive advantage in changing environments
(Boons & Lüdeke-Freund 2013; Chesbrough & Rosenbloom 2002; Lindgardt et al. 2009).
Environmental sustainability has been included in the global Millennium Development Goals (MDG),
and receives high importance alongside the poverty-reduction objectives. Despite the progress of
developed countries and emerging economies, there is a probable shortfall in the achievement of MDGs
for emerging economies (Sachs 2012). Environmental degradation is eluding the entire planet. MDGs
are set up to see what all countries can achieve together. Emphasis on emerging countries is important
as they face different challenges for the balance between economic growth and sustainable
development. This research takes place in the context of Indonesia, a nation that possesses one of the
biggest populations in the world, is experiencing rapid economic development and has to deal with
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many of the problems that are typical for developing countries, making the nation a proper example for
the South East Asian region.
To identify the opportunities for small firms in the Indonesian context, this study focuses on exploring
the way of start-ups in Indonesia to identify sustainability challenges and considering environmental
issues into their business model. This study contributes to a learning process on why and how start-ups
in Indonesia employ an environmental approach, what their challenges are and which barriers they have
to overcome in practice.
Doing this study provides guidelines for other firms and at the same time enhance the adoption of
sustainable business practices. Providing best practices for new firms regarding ecological
sustainability understandably benefits the environment and thereby society.
Scientific relevance
From a scientific point of view, this research sets initial steps to the development of a conceptual model
for the dynamics of incorporating environmental sustainability in the business model of start-ups. Best
practices and real life examples for start-up companies and sustainability are yet to be described.
Currently, sustainability is mostly attributed in one of the aspects of the business model only - supply
chain sustainability, rather than the holistic approach in which it addresses multiple facets of the
business model (Stubbs & Cocklin 2008). Technological start-up companies are particularly fit for
analysis on the integration of sustainability in the business model, as these new companies are less
inhibited by incumbent (successful) business models and are more likely to deliver innovative business
models to the market (Chesbrough & Rosenbloom 2002; Doganova & Eyquem-Renault 2009).
Although this research is providing an insight into the current practices, this qualitative research can be
followed by developing metrics for quantitative research to test the performance of start-ups
incorporating sustainability into their business model. In other words, by providing a start-up
perspective for sustainability, a barely mentioned field is addressed in academia and contributes to a
new research agenda.
Current state-of-art
Sustainability is a widely discussed topic in research and addressed by many scholars. The
interpretation, nevertheless, varies widely. The most cited definition of sustainability is coming from
WCED (1987) and is stating that sustainability entails the protection of the environment and natural
resources as well as the protection of the social and economic welfare of present and future generations.
This definition includes the three ‘pillars’ of sustainability (Hansmann et al. 2012). These three pillars
for sustainability are regarded the social, economic and environmental pillar. It is not implied in this
research that there is symmetry between the three pillars, as the economy and social welfare are tightly
interconnected (Keiner 2006). Meaning that economic welfare is created by society and social welfare
cannot be uncoupled from economic performance. Environment is a somewhat independent pillar, as it
is not created in its essence by society, however, it is influenced by the behavior of society. Especially
technological advances in society put their stamp on the environment (Geels 2002). To what extent
these technologies influence the environment is determined by the decisions of the company in how to
deliver their product to the market. These decisions are embodied in the business model of the company.
Therefore, this research emphasizes on the environmental pillar of sustainability in the business model
within technological start-ups. The way they bring the technical innovations to the market facilitates
the emergence of pioneering business models, as shown by the successful BM of, among others,
Spotify, Netflix and Uber (Rayna & Striukova 2016).
Innovation is essential for sustainability. The discussions on this area concentrate on companies’
strategy to reduce their environmental impacts by modifying their supply chain and creating products
or services with zero waste (Benn & Baker 2009). Innovation to improve processes and products are
often expensive, time consuming and sometimes need considerable investment, both for the research as
for the specific resources (Avery 2005; Benn & Baker 2009). Due to these reasons, it has been
discovered that a successful company is not only doing innovation through its products and processes
(Mieg 2012), but also promoting innovation in its business model and the way how the company
delivers value to their potential consumers and converts them into profit (Lindgardt et al. 2009; Massa
& Tucci 2013).
In terms of sustainability, enhancement of the business model through BMI can provide a holistic
approach to cope with changing consumers’ demands (Girotra & Netessine 2013; Gordijn et al. 2005;
Zott & Amit 2010). By including sustainability practices in the business model, the way a product is
delivered to the market changes at the root (Boons & Lüdeke-Freund 2013; Girotra & Netessine 2013).
Consequently, sustainability may prolong further in a firm’s actions. The influence of BMI in changing
environments is described in detail by Lindtgardt et al. (2009). This paper shows the competitive
advantage of firms that react appropriately to changing environments by creating a flexible business
model. Moreover, BMI for (new) technology firms has shown to deliver advantage when applied in
response to market demand (Chesbrough & Rosenbloom 2002). Literature examples are given on firms
that cope with changing desires of the market by creating innovative business models for their product
development and delivery, i.e. Xerox in the photo copier business. This promises good prospects for
the future of sustainability measures. Different phases of a start-up come with different challenges, as
resource availability and knowledge of the market and essential “know-how” changes over time.
Management policies of technology firms that are effective in the steady-state of a company are often
inappropriate during start-ups (Baloff 1970). Churchill and Lewis (1983) have developed a framework
explaining five stages of small business growth, explaining the different challenges and strategies for
each stage. The framework refers to an s-curve that can be divided in two major phases: disengagement
phase (e.g. existing and survival) and the growth phase (e.g. success, take-off and resource maturity).
Taking this learning curve into account, it is reasonable to assume that the development phase of a start-
up affects the adoption of sustainable practices in the business model.
To support starting firms on the creation of business models, the business model ontology CANVAS is
developed by Osterwalder and Pigneur (2010) and has been widely adopted by practitioners (O’Neill
2015), as well as in Indonesia. The business model canvas is a graphic organizer designed to give a
common framework for entrepreneurs to draft important elements of their business ideas into their
business model. The value of evaluating practices according to this ontology comes from its wide-
spread adoption by businesses in Indonesia. It may be a valuable tool for start-ups in their initial
development phase to structure their business ideas. Despite its general ability to represent potential
business models, it is argued not be the best ontology for targeting and explaining business model
innovation drivers (Rayna & Striukova 2016). Different scholars promote the inclusion of value
components of the business model, so as to include environmental sustainability and explain business
model innovation in its context (Bocken et al. 2013; Rayna & Striukova 2016). Identifying
sustainability practices in the light of the underlying values in a BM framework enhances the practical
usage of this study as well as the understanding of business model innovation. It is noteworthy to
mention that business model innovation will be regarded as an outcome for this thesis, because of the
limited access to procedural information for the young companies.
Knowledge gap
Sustainability is greatly assessed in literature, however, it is scattered and describes mainly
sustainability practices in small facets of business exercises. The importance of sustainability with an
entrepreneurial origin is often overlooked. The juxtaposition of sustainability, start-ups and business
13
models can provide an interesting contribution towards a more sustainable way of doing business. It
requires a combination of theory on what is known about the development of start-ups, the development
of business models and sustainability. This is combined with information about current practices of
start-ups regarding sustainability and business models to give practical implications of the theory.
In summary, this research clarifies the way start-up companies incorporate sustainability into their
business model by highlighting the facets in the components of the business model that are subject to
sustainability.
1.3. Research objectives and expected deliverables

Given the research problem presented above, the main objective of this research is to identify the current
perspective of start-ups in the technological sector towards sustainability and how they incorporate
sustainability into their business model within the context of Indonesia. Locating their actions and
decisions according to context and business model characteristics enhances the practical usage of this
research.
Eventually, this research aims to come up with the following results:
• Determination of how business models of start-ups can be taken into account for
implementation of sustainable practices.
• A clarification on the contemporary attitudes of technological start-ups in Indonesia towards
sustainability and which business model components are affected
• Identification of experienced drivers and barriers in delivering ecological sustainability through
business model design or innovation.
1.4. Research Questions

In order to reach the above mentioned objectives, the following research question is formulated:
How do technological start-up businesses in Indonesia apply business model innovation in

order to regard environmental sustainability, and what are the challenges they encounter?
To come to a comprehensive answer of the main question, the following sub-questions are formulated:
SQ1. What is the current state of art of literature on business model innovation regarding the support
of environmental sustainability for technology management?
The goal of the first research question is to present the current knowledge on business model innovation
and business models for sustainability in the context of innovation and technology management. The
findings from literature provide an in-depth understanding of the main concepts and serve as a
foundation for the further research questions.
SQ2. How can business model innovation support technology start-ups in taking sustainable practices
into account in their business model according to current literature?
The goal of the second literature based research question is to combine the current knowledge on
business model innovation and business models for sustainability in the context of start-ups. From the
presented literature, different sustainability practices are proposed that suit the characteristics of start-
ups.
SQ3. How is environmental sustainability perceived in Indonesia and what are specific challenges for
start-ups within this (developing) economy?
This goal of this sub question is to put actions of the start-ups in this research in perspective. It is
addressed in two-fold, firstly through desk research exploring the national context in which they
operate. Additionally, during the field study the exposure of start-ups to these factors are evaluated.
This may provide insights in the factors that contribute or hamper the adoption and diffusion of business
models for sustainability, as well as it helps to place the decisions of the different start-ups in context.
SQ4. How do technology based start-up businesses in Indonesia take sustainability practices into
account as a core value of their BM, or as a commercial value (branding) their product offering?
The goal of this sub question is to reveal current sustainability practices of start-ups in Indonesia,
alongside their attitude towards environmental sustainability. Four case studies are analyzed to get an
in-depth vision on current performance regarding sustainability practices of start-ups in Indonesia.
These practices are evaluated in the context of the business model, according to the core values of the
start-up. The result of this sub-question contributes to the understanding of the current sustainability
practices of start-ups in Indonesia. Moreover, it will be assessed whether environmental sustainability
stands at the core of the start-up business or whether it is a form of enhancement of commercial values.
15
1.5. Research approach
The following framework is used to answer the formulated research questions:
Figure 1 Research framework
The steps undertaken to come to reach the objectives of the research can be described according to the
research framework depicted in figure 1.
To answer the first sub-question, the current theory on business model innovation in the context of
innovation and technology management and the current practices on business models for sustainability
(BMfS) are explored. This provides a deep understanding of the main concepts of this research and
deliver relevant expectations for behavior along the dimensions for the cross-case analysis.
The output of the first sub question is the input of the second sub question, which is complemented with
literature on start-up characteristics and sustainability. By combining the literature reviews,
sustainability practices for start-ups are proposed.
The third research question serves to provide context for the selected case studies and the specific
characteristics of Indonesia which influences the practices of start-ups regarding environmental
sustainability are identified. These factors are included in the interview protocol, to be later discussed
with the selected cases.
To answer the fourth sub-question, a field study is conducted. Four case studies serve the exploration
of current practices of start-ups in Indonesia. The selection of start-up companies to be included in a
multiple case study was based on factors facilitating the objectives of the research: 1) the development
stage of the start-up (Churchill & Lewis 1983), and 2) the core values of the start-up. Case-study
methodologies are a suitable methodology for new theory building research (Eisenhardt 1989). Inherent
to case-study analysis is the search for cross-case patterns, the juxtaposition of cases on different
dimensions enables the validation or rejection of the conceptual model for sustainable business model
dynamics for start-ups within Indonesia.
Table 1 Steps undertaken in this thesis
Aim Input Contribution to RQ

Step 1 Literature Literature on business models and Answers to SQ1 and SQ2
review business models for sustainability
directed towards technology start-
ups
Step 2 Analyzing Literature on environmental Answers to SQ3
context of start- sustainability within emerging
ups economies, especially on
Indonesia
Step 3 Case selection Results from step 1 Four cases on two dimensions
for comparison
Step 4 Case studies Interviews and desk research Description of business model
of cases
Step 5 Cross-case Aggregated data from step 4 Answers to SQ4
analysis
The steps that are followed to come to the answers of the sub questions are described in table 1. The
literature review will serve the answers of the first two research questions in the form of three separate
literature reviews. The first sub question is answered by the first literature review and the second sub
question is answered in the third literature review, using the accumulated knowledge from the previous
two literature reviews. Step 2 serves as the context analysis, examining specific factors that are apparent
in Indonesia and answering the third sub question.
Starting from step 3, the practical study will be executed by means of a multiple case study. First a
selection will be made by theoretical sampling, in order to enhance the usability of the cases. For this
research two start-ups that are in the process of designing their initial BM are selected, one company
that has ecological sustainability embedded in the design of the product, and one that is focused on
other, mainly economic brand related, values to remain competitive. Also two start-ups that have
already commercialized their product and thus have an established BM are scrutinized. Again, one
company that has ecological sustainability embedded in the design of the product, and one that is
focused on other, mainly economic brand related, values to remain competitive. By this 2x2 design,
depicted in table 2, the comparison different practices to identify similarities and differences,
opportunities and barriers towards environmental sustainability can be made.
17
Table 2 Dimensions of selected case studies
Sustainability Economic, brand

values related values
Disengagement:
Existence & Case 1 Case 2
Survival
Growth: Success
Case 3 Case 4
& take-off
This matrix comparison results in four case-studies, an empirical approach to investigate a phenomenon
in its real-life context. Case-studies are especially suitable when the boundaries between the
phenomenon and its context are interacting and blurred (Yin, 1994). Considering the research design,
it is common practice to look for precedents in the field. Business model literature mostly uses case-
based and cross-sectional approaches. For example, Dmitriev et al. (2014) found from four case studies
that a successful business model on commercializing technologies integrates specific elements of the
business model in a dynamic and cyclical manner. Zott & Amit (2007) have conducted a cross-sectional
study, scrutinizing in the impact of novelty or efficiency oriented business models for start-ups. In order
to ‘maximize the utility of information from small samples and single cases’ on the development of
business models regarding environmental sustainability (Flyvbjerg 2006, p.230), the four cases
comprise a heterogeneous group of start-ups defined on basis of theoretical sampling to be able to
generalize the findings among a wider area and identify the significance of various circumstances for
case process and outcome (Flyvbjerg 2006).
For step 4, semi-structured interviews based on the protocol developed on BMI and sustainability
regarding start-ups are conducted with the selected start-up companies. In order to make an indication
on the business model developments of these companies, the interviews are recorded, while additionally
field notes are taken. A cross-case analysis in step 5 serves to aggregate the data and extract general
sustainability practices.
Through thorough analysis of case study data, the following identifications are made: i) sustainability
practices, ii) challenges regarding sustainability faced by the companies and iii) similarities and
differences between the approaches and challenges between the start-up companies from different
industry backgrounds. Evaluation of these results can eventually provide as an inspiration for other
start-ups for implementing sustainability practices in their business model through business model
innovation, or lead to tips for improvement of the adoption of sustainability practices.
1.6. Structure of this thesis

The remainder of this chapter is structured as depicted in figure 2. The introduction has been presented
in this chapter. Chapter two contains the theoretical background, consisting of three literature reviews
flowing from general business model innovation to business models for sustainability and eventually
presenting specific sustainability practices for start-ups. Moreover, this chapter provides the reader with
understanding about BMI regarding sustainability practices with different impacts that can be expected
to be found in certain cases, as well as an explanation of the different dimensions chosen for the
selection of the case studies. Chapter three discusses political, cultural and economic trends in Indonesia
that may affect the adoption and diffusion of business models for sustainability. Chapter four is
concerned with the research methodology behind this research, explaining different steps undertaken to
answer the research questions. Chapter five presents the case studies together with the cross case
analysis. An intermezzo is included in this chapter to argue for the findings in this chapter. Chapter six
presents the findings per research question, a discussion on the findings, limitations and future research.
Figure 2 Flow of thesis
19
Chapter 2. Theoretical background
This chapter serves to answer the first two sub questions. The chapter is structured into three literature
reviews, the first one presenting literature on business models and business model innovation in section
2.1. In section 2.2 the literature on business models for sustainability is discussed. The last literature
review is presented in section 2.3, and connects the previous findings to start-ups and proposes several
sustainability practices that start-ups can take into account in their business model.
2.1. Literature review on Business model and Business model innovation

The purpose of the literature review is to introduce the most important concepts of this study and answer
the first sub question that is concerned with how start-ups can use creative business model design to
implement sustainable practices that are beneficial to the environment. Three distinct literature streams
are described and combined. First literature on business models is given, which introduce the common
components of business models and ways of innovating the business model (e.g. business model
innovation). Second the literature stream on business models for sustainability have been discussed, to
reveal previous findings on the implementation of environmental sustainable practices. Third the
literature is combined with the knowledge that exists on characteristics of start-ups and sustainability.
The outcome of this combination of literature are proposed targets for start-ups to implement
environmental sustainability into the business model and the motivation and factors for the selected
dimensions of the to be scrutinized cases.
2.1.1. Introduction
The concept of the business model emerged somewhere around the 1990s with the upcoming of the
internet and the e-commerce business. It gained momentum among scholars and business practitioners
from that moment on (Timmers 1998; Zott et al. 2011). Over the years, multiple scholars have aimed
to unify the scattered, fuzzy front-end, literature on the concept. Six notable stages on the evolution of
the business model in literature have been identified, each stage providing a particular outcome: 1)
define & classification of business models; 2) list of business model components; 3) description of
business model elements; 4) business model ontologies; 5) application of the business model concept,
and the sixth stage added by El Sawy & Pereira, 6) theory building & dynamic modelling (Gordijn et
al. 2005; El sawy & Pereira 2011). Zott et al. have analyzed the divergent literature and separated the
literature into three silos: 1) e-business and the use of information technology in organizations; 2)
strategic issues, such as value creation, competitive advantage, and firm performance; 3) Innovation
and technology management (Zott et al. 2011). Their combined efforts have structured the until then
scattered literature on business models.
As business models have gained attention in a variety of industries, the interpretation of the concept
itself experienced an equal divergence. A plethora of definitions on business models have emerged, this
has led to confusing interchangeability of terms as business model, strategy, business concept, revenue
model and economic model. Despite this, wide-spread recognition exists in that the business model
should at least enable the linkage of two dimensions of firm activity, which are value capture and value
creation (Zott & Amit 2010; Casadesus-Masanell & Ricart 2010; Baden-Fuller & Haefliger 2013).
There has been referred to the business model as an architecture, design, pattern, plan, method,
assumption, and statement (Morris et al. 2005). For this study it is useful to clarify the distinction
between business model and strategy. A strategy is developed to create strong and unique characteristics
of the company in order to compete in the marketplace. A business model, however, does not
exclusively nor essentially describe the firm’s unique characteristics as it is more concerned with the
overall organizing logic of the firm (Richardson 2008). The business model has been identified as an
instrument of strategy execution, it can be conceived that the business model is a reflection of the
realized strategy of a firm (Casadesus-Masanell & Ricart 2010). Meaning that the strategy of the firm
can stay true whilst business model components are altered in order to reach the firm’s objectives.
It is important to take note that rapid advances in information technology have drastically altered market
structures and the way firms compete and cooperate and that one firm’s actions also affect the
relationships and possibly the perceptions of other firms. Business models are evaluating the firm’s
actions within the ecosystem they are part of, the exchanges with others are a unit of analysis within
the business model, and is describing how a firm or a network of firm’s deliver value to its customers
(Bouwman et al. 2008). These developments shape the actions of companies with regard to their
business environment, and can create opportunities for innovative business models.
These sections provide further insights gained through the literature review on the business model
concept and is organized as follows: first, there is theoretical building giving an overview on the
research relating the concept of business model to technology in the field of innovation and technology
management. Second, a more practitioner-oriented approach is explored explaining contributions to
business model ontologies aiding in the development, analysis and innovation of the business model.
2.1.2. Business models and business model innovation for technology firms
The business model concept has been linked with the emergence and success of technology related
companies. The typical assumption that a radical product or service improvement will automatically
lead to increased profits for the innovative firm is ignoring significant problems a firm can encounter:
connecting the interdependencies of the business model with the technological effectiveness. That the
business model is a significant element of a business to unlock a technology’s success is established by
several scholars. The business model can be translated into an ontology in which it connects a firm’s
innovative technology to its customer needs and/ or to other resources, and a good business model is
regarded essential to unlock the value potential of the technology itself (Chesbrough & Rosenbloom
2002; Chesbrough 2007; Zott et al. 2011). Al-Debei & Avison (2010) explain that a technology is only
successful if it fulfils the needs of its customers and are explaining the business model concept as an
interceding framework to align the technological artefact with the attainment of strategic goals and
objectives.
Added to the traditional objects of innovations like product, service and organizational innovation, the
business model has been expressed as a unit of innovation. It represents a holistic form of organizational
innovation that may cross a firms’ boundaries by affecting the business ecosystem. The business model
can either be radically changed in an architectural approach or the innovation may occur in its
components. An empirical study has shown a positive correlation between novelty centered business
models and firm performance (Zott & Amit 2007) and Cucculelli & Bettinelli (2015) show that
entrepreneurial firms who innovatively modify their business model over time experience a positive
effect on firm performance. The literature on BMI can be divided in scholars who view BMI as a
process, looking into the organizational characteristics that facilitate or hinder the process of BMI, and
scholars who are regarding the outcome of BMI as a static object, more looking into the particular
feasibility of the resulting business model (Foss & Saebi 2017). As this thesis concerns technology
start-ups, the unit of analysis is the outcome of business model innovations, regarding BMI as a static
object whilst looking for motivations and reasoning of the firm’s decisions.
BMI typology
Foss and Saebi (2017) have developed a BMI typology for four types of BMI, in which they differentiate
between the novelty and the scope of the BMI (see figure 3). The business model is explained as a
“complex system”, in which complexity refers to the non-simple interaction between parts of the
business model. These parts are in turn interdependent subsystems, in the business model this may refer
21
to the value capture, delivery and appropriation mechanisms. While the interdependence of the activities
within the subsystem are regularly highly interdependent, “the degree of interdependency among
subsystems may vary” (Foss & Saebi 2017, p.216). Nondecomposable systems express high
interdependency between sub-systems, a change in one of the subsystems inherently involves major
architectural change. Decomposable systems, however, express low interdependency among its
subsystems and a change in one of its components does not necessarily involves architectural change,
thus referring to “modular” change. Evolutionary BMI is the alteration of business model components
which tend to happen naturally over time, during the fine-tuning process of the firm’s activities. An
architectural change of the business model transcends modular changes as multiple components of the
BM are interconnected and affected. Architectural changes that are new to the firm but not to the
environment are mostly a response to external events as when an innovative BM emerges in the face of
competition (Foss & Saebi 2017). Changes in the BM that are new to the industry requires active
management involvement, is mostly directed to disrupt the market, and has therefore a higher potential
to bring competitive advantage.
Figure 3 Business Model Innovation Typology (Foss & Saebi, 2017)
Companies intrinsically valuing the natural environment are likely to express through the architecture
of its business model; collaborating on sustainability initiatives with key partners on one hand, whilst
performing heavy deforestation to obtain key resources on the other hand is an example of a value
mismatch. On the contrary, companies focusing on economic, brand related values may innovate their
business model in order to implement sustainability practices, but these BMIs are likely to remain
modular in nature, not altering the interdependencies among subsystems. To examine the role of
environmental sustainability in an entrepreneurs’ decision making models, the position of
environmental sustainability with regard to BMI will be established for the cases of this thesis.
The evolution of the business ecosystem is shaping the emergence of business models. There has been
a shift in the development and application patterns of technologies. Where in the past commercial or
societal problems were solved by a single directed technology, nowadays general technologies tend to
emerge first, after which multiple commercial applications are connected to it (Gambardella &
McGahan 2010). This variety of commercial applications can be translated into multiple business
models, unlocking the multi-potentiality of a technology. Calia et al. (2007) show how an innovation
network enables business model innovation. El Sawy & Pereira (2011) have predicted areas that will
experience shifts, which require and foster new business models: 1) digital platforms (internet of things,
cloud technology); 2) societal trends (demand for sustainability, collaborative consumption); 3)
distributed co-creation of value (open innovation, bottom of the pyramid markets). These findings
exemplify the close connection of technologies with disruptive business models.
Overall, the literature shows that business model innovation can be an influential system to reshape a
firm’s or even an industry’s behavior and shows that emerging technologies are closely connected with
innovative business models.
2.1.3. Business model tooling: connecting the theory to the practitioner
Over the years, many scholars have developed business model tools to help practitioners implement the
theory. Wirtz et al. (2016) have conducted an extensive literature review on the BMI literature to date
and have distinguished four approaches that can be used for business model design and innovation: 1)
linear approaches that follow a step-by-step procedure; 2) semi-structured approaches, which proclaim
the need for a basic systematic structure, but explicitly mention the need for creative process steps; 3)
mixed approaches that combine procedures from the linear and semi-structured approaches; 4) method-
oriented approaches, that emphasize on the methods and techniques applied instead of focusing on the
processual perspective. Heikkila et al. (2016) have scrutinized BMI for SMEs, and identified an
innovation path that occurs for starting up a new business. They emphasize the need of a simple baseline
ontology, like CANVAS, STOF or CSOFT, which coincides with the first approach of step-by-step
procedures. It is from the second approach it is proposed that CANVAS could implement a trial-and-
error-loop by using it as an experimental instrument (Hoveskog et al. 2015). Another interesting
approach comes from Günzel and Holm, whom divide BMI into a front-end (externally-oriented) and
a back-end (internally-oriented) innovation, and suggest an experimental approach for the front-end
innovation and a structured linear approach for the back-end innovation (Gunzel & Holm 2013).
Chesbrough (2007) has developed a business model innovation framework which contains a typology
of different types of business models for an enterprise. It distinguishes six types, from type one being a
very basic (undefined) business model, to type six where the business model is an adaptive platform
where key-partners and customers have become business partners engaging in the business model. The
typology gives insight into what is possible with the business model and highlights how a continuous
and open innovation approach can leverage the firm’s success (Chesbrough 2007). Technology start-
ups may take this into account to see whether they are able to further innovate their business model.
To further categorize past efforts on business model tooling, Eurich et al. have analysed the different
methods of business model design, and revealed six distinct approaches with their strengths and
weaknesses displayed in table 3 (Eurich et al. 2013).
23
Table 3: Identified approaches to BM development (Eurich et al., 2013)
The first approach that concerns cases and lessons learnt are focusing on specific designs of business
models and form rich insights to practitioners in a similar situation, however they are hardly
generalizable and have low structural guidance. Component-based approaches are providing a
structured process facilitating the discussion on various options of business models, but are typically
neglecting the interdependencies between components or the effect on the business ecosystem, with the
exception of the STOF ontology which is deliberately considering these interdependencies (Bouwman
et al., 2008). Conceptual model approaches are addressing these interdependencies and hence give a
more rigid framework supporting consistency to build on. However, this rigidity is both a strength as it
is a weakness, as a practitioner might depend to forcefully on the framework and overlook important
aspects as the organization’s mission and its environment. Causal loop diagrams are more concerned
by describing the core logic, neglecting specific choices, and design patterns are more concerned with
the replication and recombination of proven structures. For the practical use of new firm entrepreneurs,
it seems vital to include a quite rigorous framework in order to give direction to the thoughts and ideas
(Heikkilä et al. 2016).
2.1.4. Conclusion
In these sections the literature on business model innovation regarding technology and innovation
management has been provided, and has been presented together with ontology efforts of scholars to
facilitate the adoption by practitioners.
The business model is demonstrated a necessary instrument to bring new technologies and business
ideas to the market, also it may serve as a unit of innovation to unlock the technology potential. By
means of business model innovation, different approaches have been explained. The innovation can
either be architectural, e.g. an alteration in one part will affect all other parts, or the innovation can be
modular of nature, e.g. an alteration can be self-contained, hardly affecting the other components of the
system. The position of environmental sustainability with regard to this BMI typology will be assessed
for the selected start-ups. The position of environmental can be either in the architecture of the BM or
it can be represented in the components of the system. As start-ups do not have a very long timeline
and history in data, business model innovation is examined as the static outcome of decisions.
Business model ontologies are often at the front-end of business model development and innovation,
these sections have explained different approaches to these ontologies. It is important to understand
how starting entrepreneurs come to a business model and where decisions can be influenced by values
that affect environmental sustainability. Different approaches come with different rigor, which provide
differing strengths and weaknesses. These basic approaches form the foundation of more specialized
business model ontologies, like the one including environmental sustainability. As the business model
is mostly formed by the adoption of business model ontologies it comes at hand understanding the
efforts of scholars in how to implement environmental sustainability in business models, the next
sections elaborate further on business model ontologies that have been adapted for sustainability.
25
2.2. Literature review on business models for sustainability
2.2.1. Introduction
The importance of the relation between business and sustainability is widely recognized (Avery 2005;
Hall et al. 2010; Sachs 2012). Sustainability is mainly referred to in the context of the triple bottom line
which explains the concept according to three dimensions of sustainability: the economic, social and
environmental dimension, as proposed by Elkington (2004). However, Hansmann et al. (2012) argue
that the synergy between these three constructs is not necessarily balanced. Correspondingly, it is not
implied in this research that there is symmetry between the three pillars, as the economy and social
welfare are tightly interconnected (Keiner 2006). Implicating that economic welfare is created by
society and social welfare cannot be uncoupled from economic performance. Environment is a slightly
independent pillar as it is not created in its essence by society, however, it is influenced by the behavior
of society.
Sustainability has been connected to business practices in the form of corporate social responsibility
(CSR), in which ecological and social beneficial practices are campaigned. A literature review of
Salzmann et al. (2005) has examined the relationship between financial performance and ecological-
social performance as well as the attitude of the management towards ecological sustainability. In this
review, financial performance is set apart from the social and ecological performance and ecological
performance is mainly assessed by means of eco-efficiency. In other words, how can social and
ecological performance enhance financial performance. A notion that is criticized by other scholars
who view sustainability more fundamentally (Dyllick et al. 2002; Schaltegger et al. 2012). Dyllick et
al. argue that, besides eco-efficiency, it is needed to change the awareness of customers regarding their
consumption patterns (Dyllick et al. 2002). Schaltegger et al. (2012) encourage to move from the single
implementation of a sustainable practice to the inclusion of the business model for sustainability, so as
to position sustainability as an integral part of the firm’s value proposition and value creating logic, i.e.
in the architecture of the business model.
In order to achieve a sustainable impact, companies have to work towards sustainability which involves
rethinking the business logic and therefore incorporate the practices into the business model (Stubbs &
Cocklin 2008; Hall et al. 2010; Schaltegger et al. 2012; Boons & Lüdeke-Freund 2013; Bocken et al.
2014). As it is not an integral part of many business model tools, the previous chapter has not included
business models that guide practitioners in becoming a sustainable enterprise. However, there has been
a literature stream devoted to this topic and the following chapter will describe past efforts of scholars
to develop environmental friendly business models and subsequently review the literature on identified
drivers and barriers towards the implementation of sustainable business models. These sections will
elaborate on the current efforts of scholars to implement environmental sustainability into business
models, an essential construct chosen for this thesis.
2.2.2. Business models for sustainability

Business model innovation is recognized as a key to the creation of a sustainable business (Bocken et
al. 2013; Boons & Lüdeke-Freund 2013; Girotra & Netessine 2013; Stubbs & Cocklin 2008). In the
analyzed literature for this study, heterogeneity is found on the vocabularies and definitions used for
sustainable business model innovation. Several papers describe BMI as a mean to support a sustainable
technology (Boons & Lüdeke-Freund 2013; Ludeke-Freund 2010), while others refer to a more pure
form of BMI for sustainability, where the configuration of the business model itself results in benefits
for the environment (Girotra & Netessine 2013; Lindgardt et al. 2009). Additionally, Schaltegger et al.
(2012) encourage corporations to adopt continuous BMI in order to identify cost-saving business cases
for sustainability. Despite the different approaches, these authors are contributing to a mutual objective:
improving the business model to create a sustainable ecosystem. It can be stated that the terms
sustainable business models, sustainable business model innovation and business model for
sustainability are used to describe the same general concept (Schaltegger et al. 2016). For clarity this
research will further refer to business models for sustainability (BMfS). BMfS have been defined as a
“business model that creates competitive advantage through superior customer value and contributes to
a sustainable development of the company and society” (Ludeke-Freund 2010, p.21). Schalteger et al.
(2012, p.112) argue that a BMfS supports “... voluntary activities which solve or moderate social and/or
environmental problems. By doing so, it creates positive business effects”. Although there is
disagreement on the dominant value creating logic for BMfS (e.g. economic or social/ecological), there
is agreement on the creation of customer and social value and on the integration of social, environmental
and business activities (Abdelkafi & Täuscher 2016; Schaltegger et al. 2012)
Multiple scholars have attempted to accelerate the integration of sustainability into the business model
(Boons & Lüdeke-Freund 2013; Bocken et al. 2013; Bocken et al. 2014; Stubbs & Cocklin 2008;
Schaltegger et al. 2012). To achieve a BM for sustainability, Stubbs & Cocklin (2008) state that a firm
only becomes sustainable if it derives from the neo-classical paradigm; they argue for sustainability as
an objective and strategy in itself and emphasize a stakeholder view over a shareholder view of the firm.
Ludeke-Freund (2010) contributed by the development of a conceptual model for BMfS, highlighting
sustainability practices that emerge on the intersection of ecological development and business
development (e.g. sufficiency, efficiency and consistency). Later, Boons & Ludeke-Freund (2013) set
up normative requirements a BMfS should contain to support sustainable innovations; they mention
that the value proposition should provide measurable ecological value, the focal firm should not shift
its ecological burdens to its suppliers or customers, customers should be encouraged to take
responsibility for their consumption and the financial model should account for ecological and social
impact of the firm. This view is supporting the position of the environment within the architecture of
the business model for a company to become truly environmental friendly.
The previous mentioned ontologies for business models are predominantly designed to create economic
value for entrepreneurs. In order to integrate sustainability into the core logic of a firm, companies
should rethink their strategy and business model (Bocken et al. 2013; Bocken et al. 2014; Boons &
Lüdeke-Freund 2013; Ludeke-Freund 2010). The value mapping tool is an adapted ontology that
includes sustainability at the root of the business model by rethinking the value proposition in terms of
value captured , value created, value destroyed (e.g. negative impacts on society and environment) and
value missed (e.g. underutilization of resources) (Bocken et al. 2013). Moreover, it encourages a
stakeholder view of the network and how value is perceived by these various stakeholders. However,
through this value perspective the ontology may lack guidance to implement sustainability into all
elements of the business model.
Further materializing the concept on BMfS, Bocken et al. (2014) have developed archetypes for
practitioners to implement sustainable business practices (see figure 4). They are grouped according to
their major innovation: technology, social or organizational innovations. The identified and developed
archetypes are: maximize material and energy efficiency, create value from waste, substitute with
renewables and natural processes, deliver functionality rather than ownership, adopt a stewardship role,
encourage sufficiency, repurpose for society/ environment, develop scale up solutions. Depending on
the industry and product or service, firms can adopt a single archetype or choose to recombine elements.
27
Figure 4 Archetypes for BMfS as developed by Bocken et al. (2014)
The role of sustainability in the business model is addressed from both a firm-level perspective as well
as from a system-perspective (Benn & Baker 2009; Bocken et al. 2014; Stubbs & Cocklin 2008). In
line with this approach, Laukkanen & Patala (2014) view the business model in the socio-technical
context of the organization and state that the diffusion of BMfS hangs with the sustainability of the
ecosystem. An interesting approach on business models for sustainability come from Abdelkafi &
Tauscher (2016), who connect the BMfS with the values beliefs and norms (VBN) theory. It emphasizes
the importance of the cognitive representations of the environment within decision makers and
customers. The mental representation of the natural environment will direct their behavior (Abdelkafi
& Täuscher 2016). Adding an individual-level perspective that influences the adoption of a BMfS.
According to the view of Bocken et al., organizations adopting a BMfS should overcome structural and
cultural barriers to achieve firm-level sustainability, whilst collaborating with key stakeholders that
foster system-wide sustainability (Stubbs & Cocklin 2008).
Business model innovation can thus be used as a mean to continuously identify cost-saving
opportunities (Schaltegger et al. 2012), promoting a modular update of the business model. However,
to alleviate the whole business model to deliver sustainability, architectural changes are preferred.
According the literature, it is possible to derive two main components of the BMfS. A stakeholder over
a shareholder view is a central part as it covers the system-wide and firm-level perspective and
transcends pure economic incentives; and a sustainable value proposition is essential to communicate
and materialize the ecological intentions.
The different contributions and perspectives of authors are depicted in table 4. The scope of BMI has
been established by the position of environmental sustainability in the decision making process for the
business model innovation. When the core logic of the firm is transformed, environmental sustainability
takes a position in the architecture of the business model. Is environmental sustainability achieved
through short-term innovations and updates, then it is more likely that environmental sustainability has
taken a position in modular BMI.
Table 4 Contribution to environmental sustainability and scope of the BMI
Author Contribution to sustainability Scope of sustainable

BMI
Stubbs & Cocklin Firm develops internal structural and cultural Architectural
(2008) capabilities to achieve environmental
sustainability
Ludeke-Freund (2010) Cost saving activities that enhance sufficiency, Modular
efficiency and consistency of resources
Schaltegger et al. Firm should continuously update its business Modular
(2012) model to come up with business cases for
sustainability
Bocken et al. (2013) An adapted ontology to assess environmental Modular/
value (Value Mapping Tool) Architectural
Boons & Ludeke- A set of normative requirements that contribute to Architectural
Freund (2013) the achievement of a BMfS, to support sustainable
innovations
Bocken et al. (2014) Eight different archetypes of BMfS that can be Architectural
adopted by a firm to achieve environmental
sustainability
Stubbs & Cocklin (2008) advocate a rigorous transformation of the core logic of the firm in order to
achieve a sustainable business model. In their approach environmental sustainability is prioritized over
economic incentives, the position of environmental sustainability is within the architecture of the
business model. Ludeke-Freund (2010) explores where environmental sustainability meets business
motivations and identifies areas of cost-saving opportunities in sufficient, efficient and consistent use
of resources. The core logic or motivations of a firm do not have to be altered to achieve this
environmental sustainability and the scope of business model for sustainability is therefore considered
modular. The view of Schaltegger et al. (2012) is similar to that of Ludeke-Freund and advocates
business cases for sustainability in order to serve business motives, equally the scope of BMI is modular.
Bocken et al. (2013) have developed the value mapping tool for the development of a value proposition
that takes environmental sustainability into account. In this three forms of waste are considered and
stakeholders are included. This VMT is on the border of modular or architectural BMI, as it only
concerns about one component of the business model but this component may alter consequent
decisions on the business model. Boons & Ludeke-Freund (2013) and Bocken et al. (2014) are
concerned with the entire business model, in which normative requirements are giving a foundation for
BMfS and the archetypes serve as practical examples to achieve a BMfS. These BMI for sustainability
are both architectural.
2.2.3. Drivers and barriers towards implementing sustainable business models

To identify factors that influence the adoption and diffusion of BMfS, the drivers and barriers identified
in literature are discussed in this section. The research of Abdelkafi and Tauscher (2016) brings an
interesting stance, as they examine the conceptual representation of the environment in the entrepreneur
and in the customer. This representation could either be a driver for the adoption of BMfS (e.g.
environmental awareness is high) or it could be a barrier towards the adoption of BMfS (e.g.
environmental awareness is low).
29
Innovation systems can be considered as the broader institutional structures that support innovation,
comprising elements as universities, governmental funding programs and regulatory frameworks.
Universities can plan can a chief role in the adoption of BMfS in creating awareness and policy makers
can contribute by creating a favorable regulative environment for sustainable innovations (Laukkanen
& Patala 2014). These system-wide factors can count as external drivers for the adoption of a BMfS for
entrepreneurs. Other external drivers that are identified in literature are changing customer demands
(Girotra & Netessine 2013) and collaboration with intermediaries that foster sustainability (Klewitz et
al. 2012).
Schaltegger et al. (2012) have identified internal key drivers for the business case for sustainability from
literature (see figure 5). These are mainly drivers with an economic incentive, aiming to rise the profit
margin whilst benefitting the natural environment. The identified drivers are: costs and cost reduction,
risk and risk reduction, sales and profit margin, reputation and brand value, attractiveness as employer
and innovative capabilities of the company.
Figure 5 Identified internal drivers (Schaltegger et al. 2012)
Bansal & Roth (2000) have conducted a study to reveal motivations of corporations to go green and
discovered three distinct factors: competitiveness, legislation and company morale. Ethical motives of
an entrepreneur may cause an evaluation the environmental position of the firm, translating this into
sustainability practices because it is “the right thing to do”. They found that when a corporation
implemented green behavior as a mere response to legislation, a firm would only implement what was
mandated (Bansal & Roth 2000). On the other hand, a study from de Reuver et al. (2009) have examined
drivers for business model innovation in general for start-ups and found that technology and market-
related forces are of particular importance BM dynamics and that regulatory forces are of lesser
influence.
Companies who adopt a sustainable business model are often also successful in economic terms, but a
sustainable enterprise is yet to become mainstream. A locked-in situation of the external business
environment can be a hurdle for a new enterprise to implement a BMfS (Boons & Lüdeke-Freund 2013).
Stubbs & Cocklin are identifying structural and cultural barriers that have to be overcome in order to
reach firm-level BMfS. Laukkanen & Patala have identified a range of barriers for the implementation
of a BMfS, under the umbrella terms of regulatory barriers, market and financial barriers and behavioral
and social barriers (see figure 6).
Figure 6 Identified barriers (Laukkanen & Patala, 2014)
Despite past efforts to enhance the adoption of BMfS, embracement by the industry has been slow. A
study taking an evolutionary economic approach towards the role of sustainable entrepreneurship show
the sustainability transformation potential for sustainable entrepreneurship and necessary direction of
business model innovation, as shown in figure 6 (Schaltegger et al. 2016). It illustrates the impact a
sustainable small company may have when it gains more market share. Improving the [intangible]
resources for start-up companies to overcome barriers towards BMfS could accelerate the diffusion.
2.2.4. Conclusion
These sections have elaborated on the past contributions on the conceptualizing of BMfS. The literature
is fairly scattered and comes from different industries, with a few industry-independent approaches, but
accumulated they give direction for the implementation of sustainable business models.
The different contributions of authors are classified into modular BMI or architectural BMI with regard
to the position of environmental sustainability within the decision making process. A BMfS should at
least articulate its ecological values and prefer a stakeholder view over a shareholder view, referring to
an architectural business model innovation. It has been observed that adoption of ecologically or
socially friendly business models has yet to become mainstream, drivers and barriers regarding the
adoption and diffusion have been extracted from literature.
Up until this point, the first research sub question can be answered: What is the current state of art of
literature on business model innovation regarding environmental sustainability for technology
management?
The first sections of this chapter have clarified the different scopes of business model innovation: i.e.
modular or architectural BMI, and elaborated upon business model ontologies that are used for the
origins of the business model. However, past effort on business models has focused on environmental
sustainability as well. As environmental sustainability is the central pillar that is scrutinized in the light
of business model innovation, the role it plays in the decisions around the business model has been
evaluated. It can either serve an architectural scope to BMI, influencing all decisions of the business
model, or it can serve a modular scope to BMI, influencing only a small part of the business model,
which may have a smaller or temporarily effect to benefit the environment. The different contributions
on how to come to a business model for sustainability have been described and classified into the scope
31
of BMI regarding environmental sustainability. Moreover, there is literature concerned with the
diffusion of business models for sustainability and has identified drivers and inhibitors. Drivers for
business cases of sustainability are identified, but are mainly concerned about modular BMI for
sustainability. Values beliefs and norms of the entrepreneurs are also addressed and may lead to more
architectural changes to the business model. It also addressed the importance of the adoption by the
wider innovation system in which a company operates in order to have a viable business model for
sustainability. The next sections will connect these insights to entrepreneurship and sustainable business
models in the perspective of technology start-ups.
2.3. Bringing sustainability into the business models of start-ups
2.3.1. Introduction
Particularly young technology firms are prospective to evoke new ways of doing business and possess
the potential to unlock pioneering business models (Dmitriev et al. 2014; Morris et al. 2005; Schick
2002). BMI is fundamentally connected with entrepreneurship as every new-firm entrepreneur has to
make decisions on the BM and a new business model for established firms requires an entrepreneurial
view. A start-up’s age and simple organization structure work in their advantage as it nurtures openness
and decreases adversity to change (Schick 2002). The increased demand for environmental and social
sustainability has been mentioned as an antecedent for BMI (Foss & Saebi 2017). Trends in the sharing
economy have given rise to disruptive business models which focus on connecting consumers and peer
to peer exchange (e.g. AirBnB, Go-Jek, Peerby). With the increase of connectedness through
telecommunication improvements, these complex BMIs emerged and have been capable of
restructuring rigid industries (Malhotra & Van Alstyne 2014; Zervas et al. 2017). There is potential for
sustainable business models for start-ups to gain momentum and reform the paradigm as we know it
(Schaltegger et al. 2016), but whether and how this diffusion will take place is ambiguous.
If a new technology firm is to benefit the natural environment with their actions and through their
business model, how can they pursue these goals and leverage their potential, instead of viewing these
environmental friendly practices as a barrier to their economic success? The previous two chapters have
provided insights into the current state-of-art on business model innovation and business models for
sustainability. It can be anticipated that the characteristics of start-up companies will affect the
relevance of the identified elements (Wirtz et al. 2016). This chapter will elaborate on those
characteristics, merging them with the accumulated knowledge, and propose specific ways for start-ups
to implement sustainable practices in their business model.
2.3.2. Connecting the sustainability start-up literature

Looking into the specifics for small companies, regarding the sustainable innovations they can adapt, a
literature stream devoted to sustainable oriented innovations for SMEs came forward (Klewitz &
Hansen 2014; Klewitz et al. 2012). However, SMEs and start-ups are not the same concept, it can still
give some insights on their shared characteristics. It is deemed practical to briefly touch upon this field
of research for this thesis, as it can provide further insights enhancing the adoption of BMfS by start-
ups. To stay within the scope this research the findings of Klewitz & Hansen (2014) are reflected, who
have conducted an extensive literature review on sustainable oriented innovations on SMEs.
This literature review deals with sustainable oriented innovations on three levels (Klewitz & Hansen
2014):
1) Process innovation in which they look at cleaner production, eco-efficiency and logistic
innovations. Often providing economical gain for the small enterprise.
2) Organizational innovations entail the reorganization of routines and structures within the firm
and new ways of conducting management.
3) Product innovations are improvements or entirely new developments of products and services.
When those innovations are analyzed in the context of the business model of the company, they can
arguably translate into a business model innovation on a modular level. The advantage, though, of
taking an architectural approach to business model innovation is that it supports and uncovers the
underlying values that come with the innovations.
The proposed sustainable oriented innovations may be implemented by various start-ups; an
environmental sustainable vision or core value is not required. However, the extent to which
sustainability is integrated with the business model is likely to moderate the impact it has on the
33
environment. Hall & Wagner (2012) have quantitatively analyzed the link between cross-functional
based BMIs or modular based BMIs and economic performance, environmental performance and
stakeholder pressures. They found that cross functional (e.g. architectural) based BMIs have in general
a positive effect on the economic and environmental performance of the firm. To pursue environmental
innovations to transcend business model components, core decisions of the firm should be influenced
by sustainable values. Connecting these findings to the typology developed by Foss & Saebi (2017),
this can drive an evolutionary BMI to an adaptive or even complex BMI. Explaining this according to
strategy, Schaltegger et al. (2012) discuss the different approaches management can adopt towards
sustainability, and have distinguished three strategies: 1) Defensive, in which management is rather
reactive than proactive and there is no desire to gain competitive advantage with the implementation of
sustainability; 2) Accommodative, in which there is a cautious modification of internal processes and
modest consideration of environmental and social objectives; and 3) Proactive, where environmental
and social considerations are fully integrated in the core logic of the firm (Schaltegger et al. 2012). The
openness or ecological orientation to sustainable innovation of the business model will depend on the
orientation of the firm’s strategy (Schaltegger et al. 2012; Schick 2002).
Related to environmental sustainability, the business model is likely to consist of modular or
architectural innovations advantaging the environment, depending on the innovativeness of the product
or service offered by the start-up and mediated by the motivation of the management to contribute to
the environment, whereof the impact is moderated by the perception on environmental sustainability
and organizational values of the firm.
2.3.3. Ways of bringing sustainability into the business models of start-ups
Business model innovation may occur in two dimensions. First in the process of value proposition.
Referring to business model canvas developed by Osterwalder and Pigneur (2010), this aspect may
connect with key activities, key resources, key partnerships, channel and consumer relationship building
blocks. In the next stage, these are called Sustainable Value Creators. Second, business model
innovation also occurs on the way the company determines how to create revenue, or according to
Osterwalder and Pigneur (2010) it will discuss cost structure and revenue streams, these are defined as
Sustainable Revenue Creators.
There are several ways a start-up can update their business model to become more environmentally
sustainable. If a product offers sustainable solutions or a start-up has an environmentally friendly
attitude, it should include or even underline this in its value proposition. At the core of a sustainable
business model is a sustainable value proposition (Bocken et al. 2013). As described by Baldassare
et al. (2017), conceptualizing a sustainable value proposition is a critical task in the design of the
sustainable business model as it requires the understanding and managing of several needs and
objectives across a range of stakeholders in order to create and deliver shared value. Every company
has a brand, whether it is B2B or B2C, incorporating sustainability into the value proposition helps the
sharpening of the brand and communicates the values to the consumers. An example of a company that
has included sustainability into their value proposition is Interface, as described by Stubbs & Cocklin
(2008). They show that Interface regards the environment in seven fronts, among which they aim for
the use of renewable resources and moreover give back what they took (Stubbs & Cocklin, 2008). By
incorporating environmental values in the value proposition, the company is sharpening its brand-image
and customer segment.
Sustainable value creators could be generalized through the use the concept of eco-efficiency. Eco-
efficiency is the ratio between the value of the product and the impact of the activities for product
creation. In other words, eco-efficiency promotes issues on how to minimize impact from production
processes without reducing the quality of products (Keating et al. 2010; Klewitz et al. 2012). The
impact could be minimized by optimizing the usage of energy, water and other resources. Start-ups
could employ eco-efficiency by utilizing a life cycle analysis (LCA) approach to describe their business
process (Behrendt et al. 2012). With the main crucial tools of LCA – inventory and impact assessment,
start-ups could identify the crucial points of their production process that can minimalize energy and
resource consumptions. LCA also helps start-ups to identify the potential of products, are they able to
recycle or to be reused? In some cases, the by-product, particularly agricultural residual, could be used
for other purposes, such as biomass (Keating et al. 2010) and use for farm feed products (Rattanapan et
al. 2013).
Klewitz et al. (2012) stated that one of strategies to increase the involvement of young business in
sustainability is through collaboration initiatives with other parties crossing over their organization.
Small businesses may experience difficulty to conduct initiatives by themselves due to limited
resources. The collaboration could be a shared initiative to engage in social and environmental
initiatives with other corporations. Collaboration could for instance emerge by doing by-product
exchange or synergy, as is conducted by a sugar refinery in Guangxi Guiyang (China). The sugar
refinery did an exchange with other local business of their by-product such as alcohol and sugar pulp
as well as work with local authority for water treatment. The business in this areas create an industrial
symbiosis to minimize environmental impact in their society (Lowe 1997).
35
Sustainable revenue creators
Current empirical research in small business explains that small businesses’ engagement to
sustainability is driven by the extent of their sustainable initiatives and their contribution to reduce the
management risk and cost saving, whilst simultaneously increasing their profit (Schaltegger et al. 2012).
Additionally, if start-ups can identify possible reuse and recycle issues in their business process, it can
be another cost-saving opportunity.
Having sustainable initiatives, start-ups should be able to use it to enhance their brand awareness and
brand image development. Start-ups should take a pensioning as environmental friendly business. Start-
ups could specifically target ethical consumers with environmental concerns, as the number of these
consumers nowadays significantly increase. Their intention to purchase a product depends on
environmental friendly reputation of the producer of the product (Chen & Zhou 2013). Furthermore,
Start-ups are able to use their sustainability practices as their consumer relationship agenda. Start-ups
could generate consumer loyalty and attachment by promoting some environment-consciousness trends
among their potential consumers. For example, what is conducted by body shop by promoting against
animal testing to all their products (Sillanpaa 1998). Sustainable brand awareness is considered to be a
sustainable revenue creator as this practice does not benefit the environment in itself, it rather facilitates
the revenues of the company pursuing it.
Business Model Innovation could be implemented through designing new ways to create potential
revenue streams. For example, by-product innovation could create potential income for the start-ups.
Start-ups could sell their by-product to other companies that need the by-product as their raw material.
Finding a possible by-product symbiosis in a nearby business could benefit both the focal business as
well as the local economy. Porter (1990) mentions that synergy among local businesses could
contribute to local competitive advantages.
As a general description, this study argues that business model innovation for sustainability in start-up
ventures could be created at least in six building blocks of Osterwalder and Pigneur (2010)’s business
model canvas. See figure 7 for the relationships between sustainable innovations and the components
of the business model canvas.
Figure 7 Ideas for the implementation of BMfS for start-ups in Indonesia
A sustainable value proposition may lead to structural changes in the decision logic of the firm
concerning the business model. As is argued by Bocken et al. (2013) and Baldassare et al. (2017), the
value proposition manages the stakeholder view. It should comply with the normative requirements set
up by Boons & Ludeke-Freund (2013). The value proposition is a somewhat distant building block for
the business model of sustainability in this sense, and therefore addressed separately. To raise
sustainable brand-awareness among customers, a firm has to alter its consumer relationships. Steering
the key activities of the firm to environmental friendly practices that are directly visible for the
consumer alters the consumer relationships.
Collaboration on collective sustainable initiatives: A collaboration on sustainable initiatives can help to
increase the brand-awareness among the customers of the start-up. To achieve such a collaboration, key
partners, key activities and cost structure are altered by executing the collaboration. Additionally, the
channel by which customers can become acquainted with the startup are altered through these
collaborations and initiatives. By achieving eco-efficiency for the start-up the door is swinging both
ways. Key-activities are altered in order to efficiently utilize resources, while simultaneously the cost
structure is benefitted. Conclusively, byproduct exchange affects the key-partners (adding a party that
buys the byproduct), the key activities in that this product is now actively sold as well as it is adding a
revenue stream. Naturally, this list is not exclusive nor is it complete, more sustainable innovations to
the business model are possible. However, it may serve as a source of inspiration to initiate sustainable
business models for start-ups.
2.3.4. Conclusion
The third literature review has proposed creative ways of designing the business model in order to
benefit the natural environment. Several implementation strategies have been extracted from literature
and are considered to be viable for start-up companies. By this, answering the second sub question:
How can business model innovation support technology start-ups in taking sustainable practices into
account in their business model according to current literature?
Encouraging sustainability practices in start-ups is an important agenda, as the business design is still
simple and easy to modify to become more environmental friendly. Moreover, literature is stating the
importance to incorporate sustainability from start-up phase (Hall & Vredenburg 2003). By becoming
a sustainable corporation, a start-up will have to keep updating their business practices as they have to
respond quickly to global business trends and challenges. Creative business model design, as proposed
in this chapter, serves several ways for start-ups to include environmental sustainable practices into
their business model, with that answering the second sub-question of this research.
Nevertheless, the challenges encountered by start-ups in their early business make that they face
obstacles to adopt sustainable practices. The limited resources they have to deal with make the business
model an ideal target for sustainable innovation. As, if implemented cleverly, this literature review has
shown that a start-up can get around the resource scarcity and create shared value. This section promotes
a simple vision on how start-ups could adopt sustainable practices by doing innovation in their business
model. Six business model innovations are proposed, referring to six blocks of the business model
canvas (see figure 7) that try to deal with some problematic issues in start-up development.
As the business model canvas is widely educated in Indonesian context, this ontology serves the
pragmatic purpose of companies to implement sustainability into their business practices. However, it
is recognized that the business model canvas ontology has some flaws when it comes to ecological
sustainability. It regards the value proposition in a mainly economic sense. Environmental value is
complementary and inherently less attention is given to this matter. As the BMC is focusing on a single
firm it inherently devaluates the importance of the ecosystem in which a company operates. It is
important that companies realize that, in order to benefit the environment, the goal is to minimize the
37
ecological impact of the whole value chain. The company should be aware not to shift the polluting
activities to elsewhere in their ecosystem. Moreover, the business model canvas is primarily designed
as a brainstorm tool, but it is lacking an implementation guide nor has it a control mechanism
implemented to assess the viability of the business model. Start-up companies should consider these
factors and find ways to compromise for the shortcomings.
Chapter 3. Context analysis: Environmental Sustainability in Indonesia
As the cases that are studied in this research are selected in Indonesia, it is important to explain the
distinctive characteristics of the nation that will influence the adoption and diffusion of sustainable
business models. The relevance of sustainable businesses for Indonesia is described in this chapter as
well as the cultural and legislative characteristics of the nation that shape the behavior of its incumbents.
3.1. Introduction
The previous literature reviews have provided a deep understanding of the concepts that are essential
for the understanding of the practices of the selected start-ups. Most of the literature on sustainability
practices has, however, drawn their scope to western nations (Boons & Lüdeke-Freund 2013; Mieg
2012; Klewitz & Hansen 2014). It is evident that the environment in which a firm operates influences
its behavior. Cultural and structural elements shape the adoption of business models for sustainability
(Bocken et al. 2014) as well as values, beliefs and norms play a role in the behavior of entrepreneurs or
the market (Abdelkafi & Täuscher 2016). How these factors are materialized in Indonesia is described
in this chapter.
Indonesia is the world’s third largest population, and still growing. Its geographical location makes it
rich in resources but prone to natural disasters. These environmental challenges are often given a lower
priority by government officials due to the high poverty levels of the country and often demonstrate a
weak, inadequate governance (Bhasin & Venkataramany 2010). Nevertheless, the major industries of
Indonesia, like agriculture, mining and tourism, are depending on the wellbeing of the environment.
When the environment becomes deficient, these sectors will experience economical losses. Small and
medium enterprises play an important role in the Indonesian ecosystem. The SME sector of the nation
is contributing to almost 58% of GDP and is employing 97% of Indonesia’s workforce (REF). Finding
ways for small companies to benefit the environment whilst improving their ways to make profit can
be a start for Indonesia to preserve their valuable environment.
Entrepreneurship in Indonesia is a well-accepted and popular career choice, many students consider
starting their own business because of the perceived benefits that come with it. In a study of 2014 it was
found that 87 percent of a sample of business-students in Bandung are willing to start their own
enterprise, whilst the remaining thirteen percent did not decide yet and no single student answered that
they do not have any intention at all to start their own business (Setiadi & Puspitasari 2014). Especially
technology start-ups are a popular workplace among the students, 91 percent mentions a willingness to
work for a technology based start-up, with social media and entertainment as the most preferred sectors
(Setiadi & Puspitasari 2014). A study of Kaijun & Sholihah (2015) has found that students in Indonesia
are inspired by other, successful, young entrepreneurs. The favorability of a profession as entrepreneur
over other employed professions comes from the perceived benefits as gained profit and flexibility
(Kaijun & Ichwatus Sholihah 2015; Setiadi & Puspitasari 2014). The willingness of young Indonesians
to become an entrepreneur, together with rapid technological development opportunities within the
nation, demonstrate the significance exploring how start-ups can take sustainability practices into
account to facilitate ecological responsible growth.
The digital consumption of Indonesia is growing at a fast pace and exists mainly through mobile
devices. It is one of the fastest growing markets of the region considering the internet penetration
trend(Aguiar et al. 2010). However, it is still far beyond the regional pioneer the Republic of China,
which citizens spend more than double the time online than the other BRICI countries combined
(Aguiar et al. 2010). This can be an indicator and motivator for Indonesia to accomplish the
development goals ahead. Indonesia is seen to be particularly active on the social media platforms and
one of the world’s biggest smartphone users. Resourceful entrepreneurs will capture and monetize the
opportunities in this market.
39
This chapter is structured as followed: First, studies that have addressed the environmental awareness
in the area is discussed. Secondly, important parts of Indonesian culture are elaborated. Thirdly, the
regulatory and institutional environment is explained and finally the entrepreneurial culture and
education efforts are described.
3.2. Environmental awareness in Indonesia

Public awareness is an important issue when Indonesia’s environmental conservation is under scrutiny.
The natural environment of the nation comes with many challenges, from natural disaster risk
management to biodiversity conservation. Conscious and informed citizens may raise voice to address
certain environmental issues, contributing to community support levels. However, at community levels,
environmental issues are not deeply embedded within Indonesia, leading to undervaluation of natural
resources and environmental services. Recurring natural disasters (floods, landslides, fires, erosions)
have stimulated greater environmental concern, but there is shortage of analyses that determine how far
or deep this understanding goes outside of urban areas and what tools can be best used to expand this
basic awareness.
Nevertheless, some specialized studies on solid waste management and beach environment shed a bit
of light on the awareness of the community. Locally generated litter of all types of waste is a major
problem everywhere in Indonesia, especially in proximity of large populated towns (Willoughby et al.
1997). A study examining the problems occurring for waste management have acknowledged a low
awareness of community members towards environmental problems caused by illegal dumping
(Pasang et al. 2007). This littering can be felt throughout the nation and indicates the low presence of
environmental awareness among communities. People’s attitude and support towards environmental
conservation and sustainability practices is influenced by factors like education. A comparison between
the awareness of citizens from a community group and the awareness of educated citizens showed high
awareness on some environmental problems for the educated group, but a low awareness on all
environmental aspects (except AIDS) for the participants from the community group (Sudarmadi et al.
2001). However, the number of educated people is still low and community citizens greatly outnumber
educated citizens (Nawangpalupi et al. 2016). The low awareness of the Indonesian community means
that there is no social pressure on entrepreneurs nor policy-makers for sustainable behavior. The market
demand for sustainable companies is low and non-sustainable behavior is unlikely to provoke
community revolt. A major transition driving society to shared environmental consciousness is yet to
emerge.
Despite the importance of the natural environment and its resources for Indonesia, a low level of
environmental awareness comes forward. When implemented to the conceptual model of Abdelkafi and
Täuscher (2016), who state that for truly adequate BMfS you need the values beliefs and norms of the
entrepreneur aligned with the values, beliefs and norms of the customer group, a low practicality of a
western form of BMfS comes forward. Before common consciousness of the environment is
established, environmental entrepreneurs should come up with creative business designs to attract a
sufficient customer base.
3.3. Social culture

When environmental consciousness is to truly benefit the country and prolong in business actions, then
this is a display of a bigger change in culture and development. A report on the viability of CSR in
Indonesia from the United Nations highlights that CSR in Indonesia is, unfortunately, an image
presented to a public by those working behind the screen, in other words constituting of window
dressing. The complex culture of Indonesia is influencing the place of environmental consciousness
within society. On one hand Indonesia is embracing modernity, as seen in its metropolitan areas, but
great aspects from its culture are still thoroughly influenced with tradition, which is flavored by the
constraints of endemic corrupt authoritarianism (Kemp 2001). Moreover, a long history in colonialism
left its footprints on society. Capitalism is inextricably linked with colonialism and imperialism in
Indonesian consciousness. The long lasting Dutch reign made close ties with the original aristocratic
court culture at the time, which was a rather exclusive social class. A divide that continues to exist
between the masses and the ruling class, and economic corruption and suppression remains.
Endemic corruption and the strong divisional gap between regulators and citizens lead to egocentric
decisions of regulators. Government officials have unfortunately been too often found to be involved
in nepotistic acts, especially under former president Suharto’s regime. During his regime, Indonesia
was stated to be the third most corrupt country in the world, following Nigeria and Cameroon (King
2000). Resulting in projects that prioritized money of the (already rich) business man over
environmental wellbeing (Laurance 2004). This prolonging corruptive activities have affected the
environment for the worse as well as the trust and behavior of the country’s residents.
Additionally, broad social culture in Indonesian tends citizens to be accepting and keep criticism for
themselves. A study from Kusmawan et al. (2009) has shown that school children were embarrassed to
communicate with the wider society to discuss environmental concerns about the area. This comes
forward from the deeply embedded politeness of Indonesian culture, which keeps the children quiet and
calm. Extended questioning, especially of older people, is mainly considered impolite. This may hamper
wide-spread development and social acceptance of environmental practices that are rather neglected by
some of the people.
3.4. System-wide factors: legislative and institutional environment

Indonesia has been through very turbulent developments since it gained independence in 1949. Besides
environmental challenges it faces numerous other defies like alleviating poverty, controlling
overpopulation, improving education and stemming endemic corruption (Bhasin & Venkataramany
2010). Due to political disturbances, the country’s policies concerning development of environment
and SMEs has been haphazard. However, the impact of small and medium enterprises may seem small
at first sight, they constitute the majority of companies in all industrialized and developing countries.
The legislative framework for small companies to comply with environmental laws is either non-
existent or hardly enforced (Kemp 2001). A very insightful citation was stated in this same UN report
on CSR, from de Soto (Kemp 2001, p.35):
“When you step into an airplane in New York to fly to Jakarta, what you’re
leaving behind is not the high-tech world of fax machines and ice makers,
televisions and antibiotics; many people in the Third World also have
those. What you are leaving behind is the world of enforceable legal
representation”
An important instrument to raise environmental awareness is education. Environmental education is

central to its future protection and must provide people to become effective members of society.
Benefitting the environment requires long term thinking and vision from business managers. Educated
citizens are still scarce (Nawangpalupi et al. 2016). Many business decisions of entrepreneurs reflect
mainly self or family interest, and are not concerned about the wider social and environmental impacts.
Indonesia has implemented a formal environmental learning program in 1972 in Padjadjaran University
in Bandung. This Environmental Study Centers have multiplied to be 52 in number throughout the
41
country by the year 2000 (Sudarmadi et al. 2001). They conduct courses on issues related to
environmental management and are part of some undergraduate and graduate programs.
Nevertheless, legislative frameworks do not seem supportive or lag behind for the emergence of
environmental friendly businesses. What could benefit the development of environmental friendly
attitudes (and thus businesses) would be government sponsored awareness raising campaigns and
public-private partnerships, which can serve as platforms to facilitate the diffusion of sustainability
management tools in SMEs (Johnson 2015). Moreover, to address the awareness of the wider
community, media attention is proven to help (Sudarmadi et al. 2001). Conscious citizens can also
pressure regulators to implement environmental friendly regulations.
3.5. Conclusion
Indonesia faces multiple challenges when it comes to addressing environmental conservation. Low
awareness among community members and low legislative enforcement on sustainable behavior may
hamper a fast transition towards a national sustainable mindset. Nevertheless, it is highly important to
the well-being of their future generations and economy. Chances lie in educational programs, which
have been established to address environmental managerial systems and are growing steadily
throughout the country. Successful green entrepreneurs might inspire more young people to develop
environmental sustainable businesses. Moreover, it has been demonstrated that this era comes with a
multitude of opportunities for those entrepreneurs who succeed to fill the demands that come with
digitalization trends.
It is necessary to take these factors in mind when analyzing the cases of this thesis. In western
economies, emphasis on environmental sustainability may forward from customers’ demand or
legislative pressure. The presence of those factors may be of lesser strength in Indonesia, leading to
minimal pressure on environmental sustainable practices of start-ups. Moreover, financial support for
environmental beneficial practices will be lower, causing scarcer resources and incentive to take up the
environmental sustainability game.
Chapter 4. Chapter 4 – Methodology
4.1. Introduction
As explained in chapter one, this research will take a qualitative approach and consists of several steps
in order to come to the answers of the research questions. Both secondary and primary data are used to
give an overview from the current practices of start-ups in Indonesia towards environmental
sustainability. First a literature review is held and consecutively a field study is conducted to connect
the literature findings to the real-life practices.
In general terms, the methodology of this thesis comprises a multiple case-study. As a research strategy,
the case study may be used in many situations that are better examined within their natural context, as
isolating the phenomena at stake would not provide the satisfactory outcomes. So does Yin (1984, p.13)
define the case study as “an empirical inquiry that investigates a contemporary phenomenon within its
real-life context, especially when the boundaries between phenomenon and context are not clearly
evident”. Case study research excels at bringing an understanding of a complex topic and may add
reliability to theories that are already known (Taylor et al. 2006). Case studies emphasize detailed
contextual analysis of a limited number of events or conditions and their relationships. So this is true
for examining business models and business model innovations. A start-up company is a product of its
environment and makes decisions in order to be a good fit to its customers, therefore it is important to
view their business model decisions in the light of its context.
This chapter explains the methods used for the field study in detail. The undertaken steps are presented
as well as the complete framework that is used as a guideline to conduct the research.
4.2. Research design

The aim of the research is to explore how start-ups can implement sustainability practices into their
business model by doing a combination of literature review and empirical data collection. The literature
review is done in order to get a comprehensive overview of the current efforts of scholars and to identify
targets within the business model for the implementation of sustainable practices. The empirical data
collection is followed to get examples of how start-ups in Indonesia are regarding environmental
sustainability practices and how they implement this into their business model. In order to follow a clear
path, the different steps undertaken in this research are displayed in table 5.
Table 5 Steps undertaken in this research elaborated from step 3
Aim Input Result

Step 1 Literature review Literature reviews Chapter 2
Step 2 Analyzing context Literature study on Chapter 3
of start-ups sustainability within
Indonesia
Step 3 Case selection Results from step 1 Four cases to analyze the business
model and practices
Step 4 Case studies Interviews and desk Description of business model related
research with sustainability practices
Step 5 Cross-case analysis Aggregated data from Extracting implemented sustainability
step 4 practices and barriers towards
implementation
43
The first two steps of the research are described in chapter 2 and 3 respectively, and were part of the
literature review and context analysis from the research framework. The methodology in this chapter
will focus deliberately on the practical study conducted for this thesis, explaining step 3 to 5. The
practical study of this thesis revolves around four cases. Case studies are suitable for studying objects
in their natural environment and can serve different aims like generating theory, testing theory or
provide description (Eisenhardt 1989). The interest here is in the last aim, serving the objective of this
thesis to describe the current practices of start-ups in Indonesia on sustainability efforts.
Step 3, Case selection:

Having identified the factors of business model innovation and sustainability and targets on where to
implement them, it should be examined where this happens in current practice. This will enhance the
validity and adoption of the proposed approaches.
An important aspect of cross-case analysis is that the individual cases are selected with the anticipation
on either finding similar or contradicting results (Yin 1984). The cases chosen for this study have the
purpose to identify the implementation of sustainable practices for start-ups with different objectives
and development phases. It is expected to find different results for the different start-ups, however the
aim is to find overarching patterns that will enhance the adoption of business models beneficial for the
environment.
The cases chosen can be distinguished on two dimensions: 1) the development phase of the start-up:
either in their initial development phase concerning first commercialization of the product or in a further
phase wherein the company already achieved a certain degree of commercialization and experience on
the market. The second dimension 2) regards the sustainability values of the company: either
environmental sustainability is inherently embedded in the design of the service and therefore
considered from the first initiation of the company or sustainability is not inherently related with the
service of the company and is rather used as a way of branding facilitating the economic motivations
of the firm.
The respective dimensions have been chosen to enhance the relevance of the findings for companies
with different objectives and in different phases of their life, to demonstrate any opportunities and
developments that may be related to the commercialization and life phase of the company. Moreover,
it aims to show sustainable practices that can be adopted by companies regardless of their primary
objective.
Selected companies in the disengagement phase:
Case 1: <Case 1>
This company has been selected due to their presence in the LPiK incubator and promising future within
the agricultural sector in Indonesia. The company provides a smart irrigation system for greenhouse
farmers, which improves the natural environment of the farm directly. Their technology is developed
with environmental sustainability in mind and demonstrates to encompass the environmental
sustainability value.
Case 2: <Case 2>
This start-up is also a tenant of the LPiK incubator and has the potential to grow big in the near future.
Their technology is not inherently intertwined with environmental sustainability, however, they suggest
environmental applications of their space aided technology service. Therefore, they can use this
branding issue as a way to leverage their economic motivations and revenue streams.
Selected companies with commercialized products:
Case 3: <Case 3>
<Case 3> is providing a smart feeding system for fish farmers in Indonesia. This technology has similar
characteristics to the technology of Biops Agritekno in that it improves the direct environment of the
fishes. This company has already experienced significant growth and investments, with an incumbent
customer base they can respond to market demand and adjust their business model accordingly.
Therefore, it is deemed interesting what they experienced and whether they have adjusted their business
model accordingly.
Case 4: <Case 4>
<Case 4> is a company that tracks offline purchase behavior of consumers. This company has
experienced fast national and international growth. The objectives of the company are not inherently
connected with environmental sustainability, but may affect it nevertheless. Demonstrating how they
view environmental sustainability and explore whether they adopt environmental friendly practices may
inspire other start-ups to imitate.
Step 4, Case studies:

The data collection that was used for the case studies was a mix of desk research and interviews. For
each case the interview was prepared by extracting as much information as possible from the company’s
website and previous published news articles. This (mostly) led to a clarification of the provided service
by the company and could give a preliminary idea of the business model itself. As the desk research
provided minimal information on the cases, the interviews are the major source of information on the
company. These semi-structured interviews addressed the following three main topics: 1) General
background information about the development of the company 2) Business model practices and
business model innovations 3) vision on environmental sustainability and the translation to the business
model. According to the obtained information in this step, individual case studies are drawn, identifying
their business model and the implemented environmental sustainable practices. As all of the selected
start-ups have worked with CANVAS to develop their business model, and as mentioned in chapter
three, this is the dominant business model ontology perceived and educated within Indonesia, the
business model has been drawn according to the nine business model blocks of CANVAS.
Step 5, Cross-case analysis:

Having selected and described the four start-up companies for cross-case analysis the approach towards
this comparison is discussed here. The distinction on the value and development phase dimension
allows for cross case comparison between various implementations of sustainability within the business
model, thereby increasing the likelihood for the identification of sustainable business model
innovations. This explanation building approach allows for various comparisons that are as follows:
comparing <Case 1> with <Case 3> and <Case 2> with <Case 4> will provide insights into different
business model adjustments that are relevant for different development phases within a start-up
enterprise; comparing <Case 1> with <Case 2> and <Case 3> with <Case 4> will reveal the different
approaches towards implementing sustainability practices into the business model. The cross case
comparison matrix is depicted in table 6.
45
Table 6 Cross case matrix showing value dimension and development phase dimension for respective companies
Value dimension
Sustainability values Economic-, brand-related
Development phase values
Initial development start-up 5) <Case 1> 6) <Case 2>
Commercialized products 7) <Case 3> 8) <Case 4>
One of the goals of this study is to build a general explanation of how start-up companies can implement
environmental sustainable practices in their business model. If the data on the four cases is aggregated,
affected business model components can be analyzed in relation to the motivations and practices that
are identified by the start-ups. This aggregation can lead to more general insights on what drives the
adoption and diffusion of business models for sustainability of particular cases of start-ups.
The steps that are undertaken in this research are presented in the above section. The literature review
serves to identify the dimensions relevant for examining different business models as well as it provides
specific targets start-ups can use to implement environmental sustainable practices into their business
model. The practical study is set up to explore what is currently performed by start-ups in Indonesia to
reach environmental sustainability objectives. Having explained the steps that are necessary for this
study, the following part will discuss the data collection methods and reporting in more detail, as well
as it will elaborate on the coding used for data analysis in chapter five.
4.3. Data collection and reporting of the individual case studies

The data collection for the description of the case studies is based on a mixed approach of desk research
and interviews with the person responsible for the business model (e.g. CEO or founder in most cases).
Whereby the desk research was the starting point for scrutinizing the cases, also as means of preparation
for the interview in order to develop relevant questions for the specific start-up company.
Due to the limited documentation of some of the selected cases, desk research has not always been
rewarding. Nevertheless, the following types of documentation have been used: Company’s websites
and previous published journalistic articles (mostly of popular press or fund raising websites). All
articles that came forward with information on the development and behavior of the company has been
used. Due to this limited access to (scientific) information that could be obtained, the participants were
asked to fill in a questionnaire prior to the interview, so questions could be formed on the basis of these
indications.
For the interview this desk research and questionnaire are of importance to develop directed questions
regarding the business model and environmental sustainability. Next to the importance of the right
questions it is also important that the appropriate person is selected for the interview, the one who is
involved in the development of the business model. In practice this has always been a co-founder or
CEO. Before the interview takes place, the interviewee should be informed about the questions it will
receive, therefore the case study protocol has been send to the participants beforehand. The interviews
taken place with a semi-structured approach. This means that pre-set questions and topics to be
addressed are developed, but they serve as a guideline for the interview. During the interview there is
room for adjustment according to the responses obtained. The case study protocol and introductory
questionnaire can be found in the Appendix of this paper.
The reports of the case studies used in the main body of this paper are based on the simple structure of
first describing the emergence and service of the startup, where after the general business model is
explained and thirdly relates environmental sustainability vision of the company with its business
model. Additionally, a case study protocol of the European research group ENVISION has been
adopted to structure the findings on the individual cases. The research sheet is depicted in table 7.
Table 7 Research sheet on case studies
Responsible researcher(s) Anne Evita Geelhoed
The project research period from March 2017 until August 2017
Data collection tools used Desk research; Questionnaire; Interviews;
All interviews are recorded and transcribed. Transcription
headlines included in appendix and audio files available on
request.

(Kernel) theories used Concepts with regard to Supply Chain Management, Retail,
Business Intelligence, process optimization
Data-analyses Hybrid coding, a set of a-priori codes and open coding
Transcripts of interviews Included in appendix
Transcripts of observations Not done
Usage of codes and coding A list of a priori codes based on the literature review and CANVAS
ontology
Coding steps 1) Looking for a priori coding
2) Open coding
3) Looking for connections within the codes and see if they
are relevant for the sub questions
4) Further analysis for open coding as well as the a priori
codes
Software used for analyses: Atlas TI
Validation of interviews and Not yet
results
Review by contact person Not yet
Review by external reviewers No
Expert opinion requested No
Review by co researchers No
Business model ontology CANVAS has been identified to be the used ontology for all four
cases and is therefore used to describe the BM of the companies
47
4.4. Coding approach of the interviews
For the analysis and explanation of the four cases it was chosen to make use of coding. This can provide
insights into the relations and relevance of the different elements addressed in the interviews (Yin,
2009). A mix of a priori coding and open coding has been used. The a priori codes were directly derived
from the ontology used, CANVAS and from the in the identified targets for environmental
sustainability. They serve as a way to organize the obtained data. The list of all codes used is displayed
in table 8, the underlined codes indicate that they were designated a priori.
Table 8 Codes used to analyze interviews
Background economic motivation lack of technology revenue stream

barriers employee behavior lack of trust in service
employees
business model environmental LCA shared vision
sustainability
business model few possessions mission strategy
innovation
CANVAS geographic market office Sustainable branding
channel growth pain point in the time
company
Company timeline high costs for farmers pain point in the user engagement
market
conservatism improving Indonesia partner selection value chain
consumer relationships investors Problem value delivery
cost structure key activities real time data value proposition
customer segment key partners reducing production vision
eco efficiency key resources revenue model
Using this approach of coding is done to identify which business model components are affected by the
different sustainable practices of the start-up. Moreover, challenges and opportunities could be analyzed
using this approach.
To analyze the data on an aggregated level, all interviews with the founders of the companies have been
coded. For coding the data, a list of a priori codes was set-up to anticipate the findings and define the
story line. This way of selective coding (for methodology and used codes see chapter four) is done to
identify which environmental sustainable practices are implemented and which corresponding business
model components are affected.
The objective of this study is to identify which practices are implemented to enhance environmental
sustainability. Environmental sustainability is thus presented as central object of the analysis and all
practices that have an impact on environmental sustainability are coded accordingly. The storyline will
evolve around this concept. Environmental sustainability aspects can be achieved in a variety of more
concrete actions or strategies. All quotations that were categorized with environmental sustainability
were again analyzed, to identify the corresponding environmental friendly practice.
Example:
Quotation labeled as mentioning environmental sustainability:
“One of the biggest [water] polluters is the feed, if we can reduce overflow
of feed in the water, then the quality of the water will improve and the fish
will be better as well”
From this quotation you can extract the strategy of waste reduction to benefit the environment. In a
second round this code was added to this quotation. In a third round, it was observed that waste
reduction can take place in different forms too. The distinction has been made between reduction of
waste of internal processes (e.g. internal waste reduction), and the reduction of waste for the supply
chain, particularly for the end-consumer (external waste reduction). Accordingly, the example quotation
got coded as external waste reduction.
49
Chapter 5. Analysis and Results
5.1. Introduction
This chapter contains the results of the data collection and involves the transition of the literature
analysis to the real-life phenomena as it is observed within Indonesia. Four cases are selected based on
the criteria presented in table 1 (chapter 1). It involves step four and five from the methodology and
will provide data to answer the fourth and central question of the research.
The four cases are discussed, explaining their service, business model and attitude regarding the
environment. Their business models are explained according to CANVAS, a table representing the
decisions are provided at the end of every case. More elaborate case descriptions can be found in
Appendix # until #. The case descriptions are followed by a case per case comparison, highlighting the
differences and similarities on the two dimensions. The last analysis are on the aggregated data and
forms the cross-case analysis, extracting to what extent sustainability practices are taken into account
by start-ups in Indonesia.
5.2. Description of the cases
5.2.1. <Case 1>

<Case 1> is a small sized technology start-up, providing a solution for agriculture irrigation. It is acting
as a half independent company in Bandung, as tenant of LPiK incubator of Institut Teknologi Bandung
(ITB). It can be characterized as a visionary technology start-up; who’s vision is to bring a new era of
agriculture to Indonesia by introducing technology to agriculture in order to create simplicity. Core
values are: improving the agricultural sector of Indonesia and taking responsibility for people and
environment. Initially the start-up is concentrating on commercializing the first product, but the long-
term mission is to provide the agricultural industry with technological innovations that are beneficial
for farmer and environment. The company does not own an office, as it makes use of the facilities of
the incubator for managerial operations. The founders established the company in fall 2015, and became
tenant of the incubator right after. The team has been consisting of seven people from the start, a young
team with students and fresh graduates. The team has different backgrounds in biology, engineering
and finance. Management has meetings every week and duties are formally assigned but in practice
distributed based on availability. The start-ups organization structure is very simple, as they share the
final responsibility over the seven founders.
The service offered consists of a physical component that is a hydraulic pump for irrigation regulation
of crops. The hardware is complemented by a software component, that is used to monitor and control
the irrigation from a smartphone. This gives farmers more freedom and managerial simplicity to
enhance the growth of their fruits.
It is an innovative product and new to the market, as farmers in Indonesia are using mainly traditional
methods for their farming activities. Which are non-controllable and non-quantitative ways of irrigating
the crops. The manual controlling of the irrigation systems makes that the environment of the farm
enters a negative spiral. It results in superfluous irrigation, which results in crops receiving too much
water, making the fertilizer run off into the river. This run off of nutrients does not solely pollute the
nearby water systems of the village, even more, the crop appears like it is in need of more fertilizer,
which nurtures an inefficient use of resources. The product of <case 1> aims to enhance the growth
process of the crops and introduces technology to regulate the irrigation in a precise manner, sensing
when the crops are in need of irrigation and providing the water accordingly.
<Case 1> has developed their product specifically for the irrigation of greenhouse farms and are
currently operating in West-Java, however interest from other parts of Indonesia has been registered.
They provide the implementation of the product, as well as the set-up of the software and the hardware
maintenance. Customers can find the product on the website of the company, and presence on national
technology and agricultural fairs is employed to gain publicity for their product. Moreover, they
recently started a collaboration with a CSR corporation, which buys their product to supply small
farmers with low capital availability. As the start-up is still in its “disengagement” phase, the founders
of the company are currently mainly engaged in developing the establishment of the company.
Developing the product and managing the first sales. As of this, their main resources are the knowledge
they have in-house together with the hard- and software designs. They can live up to their value
proposition by receiving governmental funding and within the protection of the incubator. The company
itself has not many tangible assets nor has it an office, as it is still tenant of the incubator. It is selecting
its manufacturing partners on availability, price and benefits.
The vision of the company is closely intertwined with environmental sustainability. The company was
set up from the vision to reduce the country’s food import, by increasing the efficiency of its own
agricultural resources. More efficient use of the farmlands will lead to higher production of foods,
thereby reducing the need for extensive land usage and food imports. The intention of the company is
to simplify farming, by offering smart controlling and smart monitoring technologies to the farmers,
complemented with a smartphone application. Besides that, they aim to educate the farmers in Indonesia
regarding crop growth and in what technology can mean to the farmers. Also hoping to stimulate young
Indonesians to regain interest in the agricultural sector. This includes education on environmental
sustainability and how technology can help to benefit the ecological system in their advantage [e.g.
more harvest]. The service they offer provides eco-efficiency for the customer, as the product manages
and reduces the need of fertilizer and manages the electricity of the hydraulic pump.
51
Table 9 Business model <Case 1>, with green blocks representing BMI for environmental sustainability
Conceptual BM CANVAS Company’s position

dimension building block
Value Proposition Value Simplifying farming by introducing irrigation
proposition technology in the Indonesian agricultural sector, thereby
benefiting the environment to stimulate healthy crop
growth.
Value Delivery Customer Maintaining of the irrigation throughout the year. Giving
relationships free training for the use of product, emphasizing the
environmental sustainable component of the technology.
Channels Endorsement by example farm (assisted by government)
Presence on conventions
CSR funded diffusion
Customer Greenhouse farmers (particularly on West-Java)
segments
Value Chain Key partners Government research body on agriculture
Example Farm as endorsement (urokarta)
CSR corporation
Key activities Providing the smart-technology, which manages the
irrigation for the crops as well as the electricity
management.
Enhancing the crops for maximum harvest possibilities.
Educating farmers on the possibilities of technology and
the crop characteristics.
Key resources Skilled staff, in-house knowledge
Hardware & software design
Revenue Model Cost structure N/A (Mainly fixed costs, minimal presence of tangible
assets as still tenant of incubator)
Revenue stream Selling or renting out the irrigation hardware/ software
package
Public funding, obtained from LPiK partaking
Table 9 represents the business model decisions of <Case 1>, depicting the components of the business
model that benefit the natural environment with a green background. The value proposition includes
efficient use of the environment by minimizing superfluous feeding. Moreover, bigger and healthier
crops will deliver more value for the farmer, requiring less land usage for similar profit. In relation to
their customers, the company emphasizes on the environmental benefits, as a mean to attract more
customers as well as to obtain channels. The emphasis on environmental sustainability has attracted a
CSR funding program that acquires the product of the company to support low-income farmers in the
region, thereby obtaining a “green” channel as well as a “green” key-partner. To live up to the value
proposition, the company delivers the smart-technology to enhance crop efficiency and put time and
effort in the education of farmers regarding crop growth and efficiency.
5.2.2. <Case 2>

Only 17% of the Indonesian population are connected with the internet, whilst globally this is around
40% of the population (ITU 2016). Nearly half of the Indonesian population is living in rural areas (The
World Bank 2016). In these regions internet coverage is low and hardly accessible. Traditional
technologies to realize internet coverage are costly and time consuming for these desolate parts of the
country. The technology developed by <case 2> is providing solutions for the internet coverage in these
hardly accessible areas. A helium balloon will lift a tactical air flying platform into the air, which
provides the telecommunication on the desired location.
<Case 2> is a small sized technology start-up in the disengagement phase, operating in the internet
technology and aerospace industry. Providing a technological solution for internet coverage through
helium balloons. Active as tenant of the LPiK incubator, the company has no office, and can use of the
facilities of the incubator for managerial operations. Founded in September 2014 by the CEO together
with two partners. The start-up became tenant of the incubator one year after (e.g. September 2015).
Nowadays, these three people are working full-time for the company, expanded to a total of six
employees. The start-up’s long-term strategy is to provide space aided technology in a wide array of
applications, using real time data monitoring to control industries. Currently its focusing on internet
coverage through a helium balloon technology. This company is currently still in its disengagement
phase as they did not manage to fully commercialize the product yet. The incubation program will
finalize forthcoming September (e.g. 09/2017).
The technology developed by <case 2> does not require terrestrial infrastructure adjustments. The
balloons of <Case 2> are used to lift up the telecommunication devices for enhanced internet coverage,
using VSAT satellite and cable as its backhaul and share internet connection through Wi-Fi in large
areas. The power sources of the telecommunication devices are delivered through integrated solar
panels. The balloons can be aired for different time periods and are able to enhance internet coverage
in rural areas on the long term or provide a short-term solution for high density internet usage (e.g.
concerts or public events).
The start-up’s value proposition is to provide the market a system with a fast deployment time at a
relative low cost The technology has a high potential to complement the performance of satellite and
terrestrial infrastructure for internet coverage (e.g. cable, BTS and optic fiber). To compensate for unfair
advantage, the company has submitted for international and local patents to protect the technology.
There is a strong partnership with local industries and government, and with UK Satellite Business Hub
as an international partner. The technology is offered to potential business partners, that are internet
providers (TELKOM), the Indonesian Internet association (APJII), and the government. Thereby it is
supporting the government initiative to enhance internet penetration, showing a thin line between the
key partners and customer segment. The revenue stream of the company emerges from leasing the full
product to internet providers or based on the number of subscribers to the internet services during a
particular duration of internet connection. For the procurement and development of the product the
company will lease facilities, and mobilize resources that enhance the life time of their products.
Environmental sustainability is not naturally embedded in the product of the company nor is it part of
their main strategy. During the interview, nevertheless, they state to use life cycle analysis in order to
enhance the life time of the product, analyzing the trajectory from raw materials until decomposition,
benefiting the company as well as the environment. Moreover, renewable energy (solar panels) are used
to accommodate the technology with energy whilst let up in the air. However, it was stated that, before
they go further into environmental sustainability issues, there are more pressing issues to deal with first.
Survival and scaling up receive currently most attention.
53
Table 10 Business model of <Case 2>, with green blocks representing BMI for environmental sustainability
Conceptual BM dimension CANVAS building block Company’s position

Value Proposition Value proposition Enhancing Indonesian internet
penetration.
Providing the low cost internet
coverage system and fast deploying
time.
Value Delivery Customer relationships Close collaboration, as the customers
are at the same time key-partners.
There is a high degree co-creation of
the service with the customers.
Channels Direct offering to potential business
partners.
Customer segments Internet providers (B2B)
Government (enhance internet in rural
area or high dense areas)
Value Chain Key partners Indonesian internet association
Suppliers of materials and technology
Key activities Selling the service
Developing the product (assembly)
Key resources Skilled staff with knowledge on the
technology (intangible assets)
Patents
Sustainable energy components
Revenue Model Cost structure Procurement, Patents, Marketing,
Consultation
Revenue stream Leasing the Helion product for
internet providers
Table 10 represents the business model decisions of <Case 2>, where the green blocks represent the
components of the business model that contain environmental conscious decisions. As this company is
using life cycle analysis to endure the lifetime of the product that they are selling, the environmental
conscious decisions are visible in the value chain of the business model. Essential components are
selected based on their lifetime and performance (i.e. key partners, key activities and key resources).
Moreover, they include sustainable energy technology, solar panels, to keep the technology on the
helium balloons working.
5.2.3. <Case 3>

Fish in Indonesian farms are mainly handfed by employees of the responsible farmer. This is quite
problematic, as there is a big probability of overfeeding the fish. Moreover, it happens quite regularly
that employees of the fish farms steel the fish-feed and sell it to other farmers. <Case 3> is providing
technology smart fish feed solutions for small to medium sized fish farmers. The product developed by
<Case 3> is using technology to feed the fish the right amounts of food on a pre-set time schedule. The
hardware provided is complemented with a smartphone application to monitor. Resulting in more
freedom of fish farmers as they do not have to be present in person to check the situation. Additional
value from the product comes from the data analytics that are embedded in the software, enabling
farmers to improve their business and start knowledge-based farming.
The company established in 2013 and launched its first product mid 2014. It started off as a small
company with seven employees but gained traction and attracted national and international investors,
operating now in its “growth” phase. The company has over 60 employees and are hiring to keep up
with demand. The market potential for the aquaculture industry in Indonesia is large, containing over
one million businesses and an estimated market size of roughly four billion.
The growth of the start-up has evolved multiple value propositions, but the first and main value
proposition is to reduce the feed conversion ratio, which represents how much fish feed you need to
produce one kilogram of fish. Sometimes the aim is to reduce the feeding cost and sometimes to increase
fish production. Both ways increasing the profit margin for the fish farmers. Additionally, farmers can
remotely control the business anytime and can get real time data while they don’t have to be there in
person. To obtain these values, the farmers have to either rent or buy the hardware. Two “packages”
are made: the first one is that the farmer buys the hardware for 750 dollars and that includes a
subscription for the software for two years. The second is that the farmer rents the hardware and pays a
software subscription fee of 30 dollars each month.
On a small scale the company also monetizes the data they gather from farmers who gave permission.
They analyze the credit worthiness of the fish farm and connect that data with a financial institution
(e.g. bank or other investors), to enhance sustainable business growth in the economic sense.
Most activities of the company are centralized. On a daily basis the employees are occupied with various
activities. Engineers are developing and maintaining the software, a field-team doing the sales and at
the manufacturing site they used to assemble the product themselves, but are currently shifting up to
assembling by using contract manufacturers. Additionally, they handle the aftersales, do the
maintenance, replacement and repair of the product. Initially, <Case 3> works with suppliers and
vendors. For the assembling activities, one product consists of 160 parts and assembling all of the small
parts themselves means activities of solder, mechanics, painting packaging and quality checking. This
requires a lot of skills and it is out of the core-expertise of the company. So it is decided to select
partners that can do the manufacturing for them and grow with them.
Selecting the partners

A selected partner has to meet the criteria that the start-up deems important. For <Case 3> this
means that partners have to understand the business; they have to know where <Case 3> wants
to go in the future. It is important for them to find a long-term partner. When discussions with
the potential partner are held, it will go about what they [e.g. <Case 3>] wants to accomplish
in the forthcoming three to five years, and if the partner is willing to be a part of that and
whether they are willing to take investment on their own for them to grow in a mutual way.
That is the initial and basic criteria that they take. If they share a vision and they believe in
<Case 3>’s activities, then that becomes the basic. Secondary, is of course the expertise, their
portfolio is scrutinized and about expertise in building similar products is assessed. There is
due diligence as well, seeing their factory, their employees and their partners. This is done to
assess whether they have a strong expertise. Another criterion is the networks that they have.
We want to scale up and if we need some other parts, then networks or suppliers are also
important. The whole supply chain is under consideration.
Environmental wellbeing is inherently important to the company. If the environment is doing good, the
fishes are doing better and that means more business for <Case 3>. They mention environmental
sustainability on a global scale. As they produce food from the environment and if the quality of the
environment decreases it will affect the waters of the fish. Environmental sustainability is also aligned
with their vision on company expansion. The environment must remain of good quality if they want to
grow, to keep the business going. As one of the biggest polluters of the waters is the fish feed, reducing
the superfluous feeding is enhancing the water quality, increasing the quality of the fish, which means
increasing the profit for the farmers. If the profit will increase, they can sell their product. On the other
55
side, to obtain funds and investors, the environmental sustainability aspect is used as a way of branding.
Investors are more receptive for environmental incentives. Investors value environmental sustainability
and thus makes it sense for the company to use it as a branding component. On the sales side of the
company, the fish farmers, only care about profits, so ecological branding towards these farmers would
not have the desired effect.
“What we are trying to do, one of the biggest polluters is the feed, if we can
reduce overflow of feed in the water, then the quality of the water will
improve and the fish will be better as well, so it becomes more profitable. If
it is more profitable we can sell that to the farmers.”
“The environmental sustainability is embedded in the growth and future

growth of the company.”
Table 11 Business model components <Case 3>, with green blocks representing BMI for environmental sustainability
Conceptual BM CANVAS building Company’s position

dimension block
Value Value proposition Reduce feed conversion ratio, increasing the profit
Proposition margin for farmers by enhancing feeding efficiency
Value Delivery Customer Emphasizing the money-value of the product they offer
relationships
Channels Online
Physical distribution channels
Customer segments Small and medium fish farmers
Value Chain Key partners Government, distributors, investors, [big fish-feed
manufacturers], (future) manufacturers
Key activities Software development, assembly of the hardware,
sales & marketing
On-farm: reducing feeding or increasing the
production
Key resources Hardware-software package, skilled staff
Revenue Model Cost structure Components, staff, distribution
Revenue stream Sales of hardware + software/
Rental of hardware + software
Table 11 represents the decisions of <Case 3> on the business model. The blocks in green represent the
components of the business model that contain decisions that are beneficial for the environment.
Peculiar to this company is that they do not make use of environmental sustainable branding, because
there is no resonation for that aspect within the customer base. However, they are concerned about the
environment, as comes forward by the value proposition in which they encourage and enhance efficient
usage of fish feed. For branding towards investors at the establishment of the company, environmental
sustainability has been used as a way of branding, as these parties are more engaged in environmental
sustainability. Their key partners are in this sense influenced by the environmental sustainability factor.
The key activities of the company include the reduction of feeding, which benefits the environment as
less feed production is stimulated.
5.2.4. <Case 4>
<Case 4> is founded in 2015 and launched a cash-back application to track offline consumer purchase
data, in which retail customers can upload their daily/weekly paper data receipts. Aggregated data of a
solid and loyal customer base is analyzed and sold to their customers, which are big brand-related
companies. The incentive used for retail customers is that they get an amount of cash back, relative to
the purchases they have done. From the paper receipts data there is a lot of information to obtain, that
otherwise remains unknown or obsolete. The tracking of a smartphone enables the visualization of
shopping behavior: where do they shop, do they multisource to different retailers, what is the content
of their basket, and whether they are switching between different brands. Before the emergence of
<Case 4>, conventional offline tracking consisted of manual door-to-door questionnaires and surveys
as well as the physical visiting of stores to see what consumers buy. The involvement of technologies
as smartphone and smart algorithms provides a more scalable data gathering. The company has gained
significant traction over the past two years, and fastly moved to its “growth” phase. It began with seven
employees in 2015 they now have around 65 employees FTE together with offices in three countries.
<Case 4> is aiming to provide brand-related businesses with real-time data, by tracking the purchase
behavior of a scalable sample of offline shoppers. The focus is on the B2B market. On the front-end
they develop a cash-back application, but monetizing is done by extracting the information from the
retail consumers, analyzing the data they extract and then selling the data in different packages to brand-
related businesses.
The company is innovative both on services as on the business model. The initial service the developed
has been the cash-back application described above, but this has been extended over time with targeted
surveys and questionnaires, expanding the value for the brand-related businesses, creating a platform
for offline marketing research. Brand-related businesses make the questionnaires and surveys and can
then target their consumer segment of interest. Moreover, new products for traditional Asian stores are
developed, in which a store-owner can use an application to manage their inventory and register sales,
this data surves the same purpose as the data extracted from end-consumers.
The managing team has origins in Indonesia, Syria and the Philippines. The firm was never intended to
penetrate just one geographical area (e.g. Indonesia), as expansion to multiple markets has been part of
their initial vision. Currently, the application is running in Indonesia and the Philippines and they own
an office in Singapore for clientele relationships.
Environmental sustainability is not inherently embedded in the vision or mission of the company.
However, they try, whether or not with economical motivations, to reduce waste and move to a
predominantly electronic way of working. Several choices the management makes are arguably
beneficial for the environment. As so, they do not require their employees to be in the office at pre-set
times, or at the office at all. Employees are working on contract-based assignments; specific goals they
have to achieve within a certain time period. The offices they have in use are energy efficient buildings,
which already have the essential systems in place, in this way environmental sustainability is not
affected. Nevertheless, they mention that it is necessary for them to comply with the wishes of their
customers (the brand related corporations). If they require a paper printed contract, <Case 4> cannot
enforce an electronic way of signing. This can be explained as a barrier towards further implementation
or adoption of sustainable practices. Table 12 represents the choices that comprise the business model.
Key activities is displayed in a light green color; as environmental sustainability has been mentioned in
this field. However, it was not clear whether this decision was made with environmental sustainability
in mind beforehand or whether it was taken as a nice bonus.
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Table 12 Business model of <Case 4>
Conceptual BM CANVAS building block Company’s position

dimension
Value Proposition Value proposition Providing real-time data on offline shopping
behavior
Value Delivery Customer relationships Close connection of service development
with needs of the market. Keeping close and
personal relations with their clients.
Channels To consumer: smart-phone application
To clients: a platform where they can buy
pre-analyzed packages of consumer data
Customer segments Big brand-related corporations
Value Chain Key partners Clients as well as application users

Key activities Tracking offline consumer data through
smartphone application
Building software that reads buyer’s receipts
Key resources Consumer uploads of offline purchasing
receipts
Revenue Model Cost structure Mainly fixed costs as software development
costs and staff
Revenue stream Selling the data they obtain from
consumer’s through the application to
brand-related clients, which can buy
different packages depending on their needs.
5.3. Cross-case analysis, comparison on both axes

A comparison on the value dimension (x-axis) is made to see whether there are profound differences in
the business model innovations regarding sustainability practices of start-ups in similar development
phases. The direct comparison on the development phase (y-axis) is omitted, as it is more insightful to
evaluate the start-ups in the disengagement phase in a later stage of their life, to see how far
sustainability practices prolonged in their business model. Rather than comparing the progression
among two unrelated companies.
However, it is observed on the y-axis that the business models of the cases on the growth phase are
more developed and are adjusted to customers’ demand. From <Case 3> came forward that sustainable
branding towards the customer was not successful as there was no support from the customer base,
whilst <Case 1> still has to experience whether their customer base is interested about the specific
sustainable element of their brand. The comparison between <Case 2> and <Case 4> is peculiar as the
business model of <Case 4> is more defined according to customers’ demand, however, the fact that
they do not intrinsically value environmental sustainability made that the development of the position
of environmental sustainability within the business model was not affected. In fact, it is observed that
<Case 2> embeds environmental sustainability into its business model to a greater extend regarding the
use of resources, whilst <Case 4> puts environmental efforts mainly in its prolongation of electronic
business.
For comparison on the x-axis: Comparison between start-ups with inherent environmental values:
<Case 1> and <Case 3>. These two cases have been selected on the basis of their value dimension, both
have regarded environmental sustainability from the initiation of their company. This comparison
allows the search for similar patterns. As these start-ups are concerned with environmental
sustainability since initiation, the business model is expected have an architectural approach for the
inclusion of sustainability factors. In table 13 the results for both of the companies are depicted next to
each other and it is shown that their environmental approach affects the same number of different
components. An architectural approach of business model innovation towards environmental
sustainability, however, transcends an effect on components alone. An architectural business model
innovation will affect the intra-relationships of the business model components and may give rise to
radical new business models. Though, such a radical innovation to benefit the environment is not
observed in both cases.
Comparison between start-ups with mainly economic, brand-related values: <Case 2> and <Case 4>:
These two cases have been selected by the characteristic that environmental sustainability is not
inherently embedded in the company’s values. However, they might use it as an add-on or as a form of
branding to reach their economic objectives. When the business model comparison table 13 is observed,
it shows that, as expected, less components of the business model are affected than in the sustainability
values dimension. <Case 2> has mentioned LCA for the development of its hardware. The company
<Case 4> has mentioned strategic office location and employee behavior as sustainability practices,
minimally affecting key activities of the firm.
59
Table 13 Comparison business model of <Case 1> and <Case 3>, with green blocks representing BMI for environmental sustainability
Conceptual BM CANVAS building <Case 1> <Case 3>

dimension block
Value Value proposition Simplifying farming by introducing irrigation technology in the Reduce feed conversion ratio, increasing the profit margin for
Proposition Indonesian agricultural sector, thereby benefiting the environment farmers
to stimulate healthy crop growth.
Value Delivery Customer Giving the regular maintaining of the irrigation throughout the Emphasizing the money-value of the product they offer
relationships whole year. Giving free training for the use of product, emphasizing
the environmental sustainable component of the technology.
Channels Endorsement by example farm (assisted by government) Website
Presence on conventions Physical distribution channels
CSR funded diffusion
Customer segments Greenhouse farmers (particularly on West-Java) Small and medium farmers
Value Chain Key partners Government research body on agriculture Government, distributors, investors, [big fish-feed
Example Farm as endorsement manufacturers], (future) manufacturers
CSR corporation
Key activities Providing the smart-technology, which manages the irrigation for the Software development, assembly of the hardware, sales &
crops as well as the electricity management. marketing
Enhancing the crops for maximum harvest possibilities. On-farm: reducing feeding or increasing the production
Educating farmers on the possibilities of technology and the crop
characteristics.
Key resources Skilled staff, in-house knowledge Hardware-software package, skilled staff
Hardware & software design
Revenue Model Cost structure N/A (Mainly fixed costs, minimal presence of tangible assets as still Components, Staff & Distribution Costs
tenant of incubator)
Revenue stream Selling or renting out the irrigation hardware/ software package Sales of hardware + software/
Public funding, obtained from LPiK partaking Rental of hardware + software
Table 13 continued, Comparison of business model <Case 2> and <Case 4>, with green blocks representing BMI for environmental sustainability
Conceptual BM CANVAS building <Case 2> <Case 4>

dimension block
Value Value proposition Enhancing Indonesian internet penetration. Providing real-time data on offline shopping behavior
Proposition Providing the low cost internet coverage system and fast deploying
time.
Value Delivery Customer Close collaboration, as the customers are at the same time key- Close connection of service development with needs of the
relationships partners. There is a high degree co-creation of the service with the market. Keeping close and personal relations with their
customers. clients.
Channels Direct offering to potential business partners. To consumer: application <Case 4>. To clients: a platform
where they can buy pre-analyzed packages of consumer
data
Customer segments Internet providers (B2B), Government (enhance internet in rural area Big brand-related corporations
or high dense areas)
Value Chain Key partners Indonesian internet association Clients as well as application users
Suppliers of materials and technology
Key activities Selling the service Tracking offline consumer data through smartphone
Developing the product (assembly) application
Building software that reads buyer’s receipts
Key resources Skilled staff with knowledge on the technology (intangible assets), Consumer uploads of offline purchasing receipts
Patents, Components
Revenue Model Cost structure Procurement, Patents, Marketing, Consultation Mainly fixed costs as software development costs and staff
Revenue stream Leasing the Helion product for internet providers Selling analyzed data packages to brand-related clients
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5.3.1. Analyzing the aggregated data
In this section the focus is decoupled from the single case and zooms out to the aggregated data. First,
all identified environmental practices are discussed in their context and linked to the business model
components that are affected. Second, the barriers mentioned by the cases are briefly discussed. This
chapter will conclude with an intermezzo on the four cases.
The coding has exposed practices with beneficial effect on environmental sustainability. The concrete
actions performed by the start-ups are several forms of eco-efficiency: waste reduction, life cycle
analysis, usage of renewable energies and strategic office location. Additionally, encouraging
sustainable employee behavior and using the environmental characteristics as a way of sustainable
branding are observed. The words spent on each topic are depicted in table 14. The reason that amount
of words on eco-efficiency and/or total words addressed on environmental sustainability may exceed
the sum of the parts emerges because topics about possibilities and challenges were addressed.
Noteworthy, it is not implicated that word count represents the relative effort on the topics addressed,
rather that the matter has been given thought.
Table 14 Words spoken by each company about environmental friendly practices
<Case 1> <Case 2> <Case 3> <Case 4>

Eco-efficiency 25 53 57 136
External waste reduction 15 0 57 0
Internal waste reduction 0 0 0 83
Life Cycle Analysis (LCA) 0 40 0 0
Strategic office location 0 0 0 23
Renewable energy 0 13 0 0
Employee behavior 0 0 0 16
Sustainable branding 39 0 108 0
Total words on environmental 230 53 258 152
sustainability
What can be observed from table 14 is that all start-ups incorporate or at least consider environmental
practices to a certain degree. For the cases that include environmental sustainability from the beginning,
more time has been spend on the discussion on environmental sustainability. It is interesting that all
cases do this through eco-efficiency. Curiosity was directed to the differences between the companies
on the value dimension. It is observed that the two companies <Case 1> and <Case 3> are delivering
sustainability with their product and do this by minimizing external waste. <Case 4> is mainly
considered about going electronic and reducing internal waste and choosing a strategic office location.
<Case 2> has implemented life cycle analysis for the procurement of their technology, which is a form
of waste reduction that affects product endurance. Therefore, transcending internal waste reduction to
become a combination of internal and external waste reduction. Sustainable branding is only discussed
by the two cases that incorporate external waste reduction. How the different sustainable practices relate
with each other is depicted in figure 8.
Figure 8 Relationships between identified sustainable practices and their relationships (LCA: Life Cycle Analysis)
Five forms of eco efficiency are mentioned by the cases, i.e.: life cycle analysis, internal waste
reduction, choosing a strategic office location, the usage of renewable energy for equipment and
external waste reduction. These practices are therefore property of eco efficiency. As sustainable
branding is only performed by cases that conduct external waste reduction, an association is drawn in
the figure. Additionally, encouraging employees to engage in behavior that is beneficial for the
environment is depicted under employee behavior. Eco-efficiency, sustainable branding and employee
behavior are all three part of environmental sustainability practices.
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Figure 9 Identified sustainable practices linked with business model components over four cases (LCA: Life Cycle Analysis)
In figure 9 it is depicted how the identified sustainable practices of the start-ups relate to different
building blocks of the business model. The identified practices all relate to environmental sustainability,
as those are aiming to improve environmental impact. All identified sustainable practices can be linked
to one or several components of the business model, which connections are discussed next.
Stimulating ecological conscious employee behavior was discussed with <Case 4>, who do not require
their employees to come to the office during pre-set times, adjusting the key activities of the firm.
“We do not require our employees to be in the office on a 9 – 5 basis. They

work on an assignment basis in which they have to complete certain parts
of work within a pre-set period of time.”
All forms of eco-efficiency alternate the key-activities of the firm. Internal and external waste reduction
will alter the usage of resources of the company or its supply chain. Life cycle analysis modifies the
assembly of the product. The office location modifies, among others, how employees will get to the
office and what resources are used, whether new land is used for the building. When a start-up decides
to make use of renewable energies, it will modify the key activities as well as the key resources.
Internal waste refers to physical production and office waste. Reduction hereof is associated with
economic motivation and can be regarded as a form of eco efficiency, that will alternate the cost
structure of the firm.
CEO <Case 4>: “As we want everything to be electronic, we try to reduce

as much waste as possible. When we sign documents, [we ask ourselves]
can we change it into an electronic way of doing this.”
Internal waste reduction refers to the effect the business has on the waste of the whole supply chain. In
the cases of Biops and <Case 3>, this means that they are significantly reducing the resource utilization
of their direct customers. This is tightly interconnected with their service, modifying the value
proposition. Additionally, this may open the opportunity for sustainable branding.
Sustainable branding encompasses the activity of the start-up using their environmental friendly
characteristics to attract more customers or investors. When it is used to attract customers, as is intended
by <Case 1>, it modifies the value proposition, customer segment and customer relationships. <Case
3>, however, mentions their customer segment as a barrier towards sustainable branding. Their
customer segment consists of conservative thinkers who are dominantly, if not only, concerned about
money value.
CEO <Case 3>: “It should be noted that we deal with a very conservative
market, when we think of a low value product. Farmers only understand the value
of a product in “money-language”, how much money can they save or make.”
Nevertheless, environmental friendly characteristics are used as mean to attract more investors.
Investors care about preservation of the environment and may share the vision of the company that aims
to enhance the healthy conservation of the waters for the fish, as well as the reduction of feed
production. This shared vision is important for investors to comply with a company and when the
company is selecting their key partners, it is called upon as an essential characteristic.
Another form of eco-efficiency is life cycle analysis (LCA), practiced by the start-up <Case 2>. This,
however, affects the value chain of the business model as key partners and resources should be modified
to prolong the life cycle of the technology, or, when assembled in-house it will modify the key activities
of the company.
It should be noted that environmental sustainability is preferably embedded within the vision of the
company (e.g. <Case 3>, Biops), to transcend the mere add-on variants of sustainable behavior. This
vision on its turn is associated with the value proposition and likely to affect other business model
components or affect components of the business model in the future. See figure 10 for all elements
included.

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Figure 10 Relationships between sustainable practices, business model components and opportunities and challenges (LCA:
Life Cycle Analysis)
The added components in figure 10 are vision, economic motivation and barriers. Eco-efficiency has
been mentioned to be driven by economic motivation as well as by environmental sustainable values,
the cost-effectiveness that comes with eco-efficiency means that economic motivations are triggered.
Nevertheless, this economic motivation is also associated with barriers, as the cheaper choice does not
inherently encompass the environmental sustainable choice. Moreover, the customer segment has been
mentioned as a barrier for achieving environmental sustainability, as the demand of customers for
environmental sustainable practices are low. Customers seem mainly considered about the economic
value of products. From interviews came forward that when environmental sustainability is included in
the vision of the company, it is associated with the value proposition of the company as well as with
the eco efficiency and employee behavior.
How is environmental sustainability perceived in Indonesia and what are specific challenges
for start-ups within this (developing) economy?
For the practical analysis of the third sub-question, the same general coding steps are taken as described
in the methodology in chapter four.

Figure 11 Barriers identified by start-ups
To answer the third sub-question of this research, which serves an explanatory purpose, the barriers and
challenges that the startups experienced for implementing sustainable practices were discussed within
the first interviews. The topics that came out of this have been depicted in figure 11. Five barriers came
forward from the case study: survival priority, time scarcity, conservatism and a locked-in situation of
the market. Those are causes of barriers. Survival priority is associated with time scarcity as economic
matters take the forehand while time is limited. Conservatism of the market is a cause of the locked-in
situation of the market mentioned by <Case 3> and the strive for cost-effectiveness is associated with
survival priority, but not a direct cause of a barrier as it may be an enhancer in the eco-efficiency strategy
in which the company may engage.
A locked in situation of the market was addressed by three of the start-ups. For the two cases within the
agri-/aquaculture sector, they mention that they have to deal with a very conservative market. There is
low education for farmers in Indonesia and mostly they only care about value of money. <Case 4>
mentioned the habits and requirements of their clients (big offices) as practices they should comply
with. For the two companies in the disengagement phase there was more emphasis on the time scarcity
they had to deal with and the survival property. In order to survive, the business has to become
profitable.

5.3.2. Intermezzo on the four cases
The analyzed sustainable practices within the four selected start-ups are: life cycle analysis (e.g. <Case
2>), sustainable branding (e.g. <Case 1> and <Case 3>), improving eco-efficiency (e.g. all cases) and
stimulating ecological employee behavior (e.g. <Case 4>). All of these identified sustainable practices
can be linked with the business model. However, it may comprehend modular updates or artifacts that
complement the economic business model, or the activities may transcend the components and affect
the relationships within the business model (e.g. architectural updates). Therefore, the position of
environmental sustainability within the business model will be assessed in this intermezzo.
67
It is observed that the companies which are selected to inherently embed environmental sustainability
into their product or service, include environmental sustainability in their vision. For <Case 1>, who is
still in the development phase of its business, this sustainability aspect comes back in their value
proposition as well as they use it as a way of branding towards their customers and investors. However,
they (still) neglect it in their value chain. For the company that is a little more mature and has
commercialized its product, <Case 3>, it is observed that they take the sustainability issues into account
for their growth plan. That is, in selecting (future) partners to assemble their product, also affecting the
value chain with environmentally friendly practices. Moreover, it is in sustainable branding is used by
both companies but in different business areas. <Case 1> uses it to target their customers and adjust
their customer relationships accordingly. <Case 3> mentions no sensitivity of their customer segment
for sustainable branding and consequently omits it to their customer segment. Nevertheless, they have
used it as a way to find potential investors, to gain traction for their business, affecting their key partners
and value proposition in this sense.
It is arguable whether these business model innovations are architectural in nature as a change in one
component does not necessarily reflect changes in the other component. However, sustainable practices
are performed by taking a stakeholder perspective, altering multiple business model components and
affecting future decisions. The important question to pose is whether the position of environmental
sustainability is within the architecture of the business model or whether it is on the outside of the
business model, used as an add-on to complement the economic motivations. <Case 1> values the
environment dearly, as came forward from the interviews, and prolongs this in their decisions of the
business model. It can be stated that, at least for now, environmental sustainability is at the core of their
business and taking an architectural position. Also <Case 3> values the environment dearly, however,
it has encountered several hurdles and a lack of direct customers’ support regarding the environmental
sustainability issue. Economic incentives may come first, but the impact on the environment appears to
be minimized by the business decisions. As so, also for <Case 3> environmental sustainability is
positioned within the architecture of the business, affecting all business model decisions. When also
assessing the novelty of the business model innovation (Foss & Saebi 2017), it is nonetheless debatable
whether these business model innovations are to be classified adaptive or complex business model
innovations. Whereas their technical innovations are the first of their kind within the Indonesian market,
they can be considered pioneers in that sense. However, the business model itself remains a fairly simple
combination of existing business models like direct sales, productization of services and the
subscription model. Ample improvement may occur to other, non- adjusted, components of the business
model and also to generate creative ways of bringing the product to the market.
It was expected that companies on the economic, brand related values dimension would demonstrate
sustainable branding to enhance their image and improve their revenues, this has not been observed.
Rather, this sustainability practice is being implemented or rejected by the companies on the
sustainability value dimension. As described above, this strategy did not create the expected revenues
so far and has thus been rejected by <Case 3>. The rejection of sustainable branding does not worsen
the environmental impact of the company, and is thus not a necessary component of a BMfS.
Scrutinizing the dimension that does not inherently regard environmental sustainable practices, there
are still ways they show ecological beneficial characteristics. <Case 2> is performing LCA to enhance
the life-time of its hardware and accommodates the hardware with solar panels for power supply. <Case
4> has mentioned particular employee related activities that benefit the environment in that employees
do not have to be in the office to work for them, however the real benefit for the environment is
ambiguous as the office is always open for them to work. Additionally, it was emphasized that they aim
to reduce office waste as much as possible by becoming a dominantly electronic enterprise. However,
these practices are emerging from dominant economic intentions. Important to notice is that these two
companies do not take the natural environment into account for future growth. These identified practices
are more viewed as an add-on to the daily behaviors of the firm and notably called to have a subordinate
importance (e.g. <case 2>).
5.4. Conclusion
This chapter has provided an overview of the case studies performed on the business models of four
companies selected on basis of their values and development phase. These cases are separately
analyzed, with special attention on the sustainability practices they perform. Seven distinct sustainable
practices have been identified and linked to the business model components to visualize where impact
has been observed. Start-ups with environmental sustainable values embedded in their service have
shown to include the environment in the architecture of the business model, affecting the
interdependencies of the subsystems. Start-ups on the economic, brand related dimension have shown
modular updates regarding the implementation of sustainability practices.
All sustainability practices have been linked to business model components, clarifying current
sustainable practices taken into account by technology start-ups in Indonesia. Thereby accomplishing
the first objective of the practical part of this study. Moreover, barriers and experiences by the young
companies have been discussed to evaluate theoretical findings of chapter three and accomplishing the
second objective of the practical part of this study.
Upon this point, the steps four and five of this study have been completed and data for the answering
of the sub questions has been presented. The next chapter will provide the answer to each sub question
and will elaborate further on the findings to place them in context of the previous findings in literature.
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Chapter 6. Findings and discussion
6.1. Introduction
Despite the fact that to implement sustainability the importance of business models is recognized, the
connection with start-ups is insufficiently explored. This study complements existing literature by
addressing this issue for start-up companies in emerging economies, by taking Indonesia as an example
for developing economies of the South East Asian region. This study contributes to this field by
connecting the literature on three academic fields and has explored ways that sustainability practices
are currently taken into account by start-ups in Indonesia, so as to assess the role environmental
sustainability can take-up in the relative new field of business model innovation and also to provide
examples for start-up companies to adopt.
This research has started with an extensive literature review in order to identify ways technological
start-ups can take sustainability practices into account, for young companies situated in Indonesia. This
was followed by an empirical study, examining technology start-ups in different development phases
and on a different value dimension, to enhance the generalizability of the findings. The main research
question to be answered is:
How do technological start-up businesses in Indonesia apply business model innovation in order to
regard environmental sustainability, and what are the challenges they encounter?
The main research question has been divided into four sub questions, which are answered separately in
the next section. Next, a discussion on the findings is presented. Followed by the practical implications
and limitations of this study, a concluding section will discuss introductions for future research.
6.2. Findings
SQ1. What is the current state of sustainability within the business model regarding business models
that serve innovation and technology management?
The first sub question has been formulated with the goal to present the current knowledge on business
model innovation regarding innovation and technology management and deemed necessary to provide
the knowledge required to answer the main question. The business model has been linked with
emergence and success of technology companies, essential to unlock the value potential of the
technology. Foss & Saebi (2017) have developed a business model innovation technology in which they
differentiate a business model innovation based on novelty: 1) New to firm; 2) new to industry, and
scope: 1) modular; 2) architectural. This typology allowed for predictions based on the value dimension
of the case selection. Previous literature has shown potential for technology firms to come up with
radical new business models, shaping the business environment in which they operate. If a technology
start-up has environmental sustainability in their core value, the scope of their business model
innovations regarding environmental sustainability is more likely to be architectural, affecting the
connections between business model components. Contrary, start-ups that use environmental
sustainability as a mean to support their economic, brand-related values will more likely to stick with
modular updates regarding their business model.
Moreover, literature addressing business models for sustainability have been evaluated and different
factors that a BMfS should contain have been extracted. A true BMfS is considered to embed
environmental sustainable practices central to its architecture. A stakeholder view is emphasized as it
encompasses a system-wide and firm-level perspective on sustainable practices. Moreover, a
sustainable value proposition is regarded essential to communicate and materialize ecological
intentions. Without these prerequisites, sustainability practices embedded in the business model are
considered a modular BMI, resulting in reactive sustainability practices rather than proactively solution
oriented innovative sustainable practices.
SQ2. How can creative business model design support technology start-ups in taking sustainability
practices into account in their business model?
The second sub question has built on the results of the first sub question. This question is posed to
reveal what is currently known about environmental sustainability and the business model of start-ups
in literature. Combining the results of the literature resulting from the first sub question with literature
directed to sustainability considering start-ups characteristics has led to several ways for start-ups to
implement sustainability practices in their business models.
Two approaches are evaluated: 1) sustainable value creators, which describe practices with a direct
positive impact on the environment. Eco-efficiency, by-product exchange and collaboration on
sustainable initiatives are examples. 2) sustainable revenue creators focus on the way that
environmental friendly practices can enhance the revenues for start-ups. Cost-saving opportunities,
sustainable brand awareness, and new potential revenue streams are proposed. However, by employing
one of the proposed practices the start-up is not likely to make a major impact. It is most likely that a
combination of the two approaches will lead to the best results for both environment and company,
contemplating with positioning environmental sustainability within the architecture of the business
model rather than using modular business model innovations to reach a beneficial impact on the
environment.
SQ3. How is environmental sustainability perceived in Indonesia and what are specific challenges for
start-ups within this (developing) economy?
The goal of the third sub question was to provide context for the selected cases. The answer to this
question comes from different parts of the literature study as well as the practical study. The first
contextual factors are described in section 2.2.3 “drivers and barriers towards implementing sustainable
business models”. Previous identified drivers for both modular and architectural business model
innovations have been described. Modular innovations are mainly driven by economic incentives,
whilst architectural innovations are more likely to arise from the values, beliefs and norms within the
business ecosystem (e.g. entrepreneur and/ or customer segment).
The abundance of literature on BMfS comes from western academics and have been studied in western
countries. Sustainable initiatives in emerging economies have to deal with a very different environment,
as economic growth and welfare are yet to be developed in many ways. Several influencing factors have
been identified to influence the adoption of sustainable practices in Indonesia. Environmental awareness
is on a low level among a big part of society, especially those without education. Education seems to
play a big role in raising environmental awareness, but only a minority of students will eventually
receive environmental education. Moreover, Indonesia specifically had to deal with major corruption
in recent history prolonging to the present, which affects the trust of society in regulatory forces.
Several of these barriers have been experienced by the cases. A conservative market, locked-in
situations of the market, survival priority and time scarcity are mentioned as inhibitors for the realization
or further implementation of sustainable practices.
SQ4. What sustainability practices are currently taken into account in the business model of
technology start-ups in Indonesia?
The fourth and last sub question of this thesis serves the identification of current sustainable practices
taken into account by technological start-ups. This may serve as an initial step towards the
encouragement and further research towards sustainable practices by new firm entrepreneurs. Seven
sustainable practices have been identified to be performed by the cases affecting most of the business
model components.
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The cases with environmental sustainable values embedded in the core of the business logic drive
certain business decisions from this value. Many business model components are affected for <case 1>
and <case 3>. Both <case 1> and <case 3> reduce resource utilization of their customers with their
service. <Case 1> uses this for sustainable branding towards the customers and <Case 3> uses this for
sustainable branding towards potential investors. Moreover, from their decisions and development it is
shown that then environment is seen as a stakeholder. Both companies show to take sustainability
practices into their account in their business model and for their business model innovations, indicating
an architectural approach. Innovations in the business models observed are solely new to the firm and
can thus be classified as adaptive BMI regarding sustainability practices.
The cases with brand, economic related values also take sustainability practices into account for their
business decisions, but have only implemented sustainable practices in business model components of
the value chain. <Case 2> deploys LCA for the production of its hardware and uses solar panels to
accommodate it with energy. This is not seen in their industry field so far, classifying their BMI for
sustainability practices. <Case 4> striving for minimal waste production from its operations and has
chosen a strategic office for its activities. However, these sustainable practices are considered isolated
actions, in a modular approach to sustainable business model innovation, either consisting evolutionary
BMI regarding sustainability practices (e.g. <Case 4>) or focused BMI regarding sustainability
practices (e.g. <Case 2>.
Besides different barriers towards the implementation of sustainable practices, no major differences are
observed between the cases in different development phases.
How do technological start-up businesses in Indonesia apply business model innovation in order
to regard environmental sustainability, and what are the challenges they encounter?
The four sub questions have been posed to support an in depth answer for the main research question.
The first question helped clarifying the concepts of business model innovations and business models
for sustainability, providing understanding on the unit of analysis, giving directions towards different
perspectives on the implementation of sustainability practices (e.g. modular or architectural) and
identifying sustainable practices in literature. These findings were combined with specific start-up
characteristics to propose sustainable practices to be adopted. Previous literature has mainly been
performed in developed economies and will have fairly different environments than those start-ups in
emerging countries. The third sub question has provided the contextual factors that either drive or inhibit
the adoption of sustainability practices into the business models of start-ups in Indonesia. Finally, the
fourth question has addressed current attitudes towards the environment by technology start-ups in
Indonesia. Four case studies demonstrate how sustainability practices of Indonesian start-ups in
different development phases are taken into account in the business model.
All four companies have mentioned sustainability practices they perform in order to run their business.
From literature, four types of sustainability practices were proposed of which two have been observed
in the cases (among which eco-efficiency, which counts for multiple distinctive practices). Moreover,
the difference between modular business model innovations and architectural business model
innovations for sustainability practices have been observed in practice. The two cases with
sustainability values from the emergence of the company have shown to take a stakeholder view of the
firm and take sustainability practices into account with the growth of their company. Resulting in
positive effects on the environment as well as positively influencing the behavior of the business
environment (e.g. key partners and customer segment). The two companies with brand, economic
related values have also demonstrated incorporation of sustainability practices. However, the decisions
come from an economic incentive and do not affect the other business model components, therefore
remaining modular add-ons to the business model.
6.3. Discussion
The findings of this study are based upon in depth qualitative research, using both primary and
secondary data. Triangulation of the data was the aim from the start, but proved difficult as little
information on the start-ups exist, next to their own website and interviews with popular press.
Therefore, internal validity might be low and any causal implications should be taken with cautiousness.
External validity, however, is improved by studying objects in their natural environment. This improves
ecological validity. Cautiousness, nevertheless, is sought in generalizing any causal relationships
implied the study. Since this study was set up to explore the current sustainability practices of
technological start-ups in Indonesia, explaining causal relationships was never within the scope of this
paper. An overview of the findings per research questions has been given in the previous section, this
section will discuss the findings with respect to literature described in chapter two and three.
The identified sustainability practices can be regarded as business model innovations as an outcome.
Business model innovation may be characterized by novelty and scope of the innovations, according to
the typology developed by Foss & Saebi (2017). This thesis has used this typology to assess the position
of environmental sustainability within the business model of start-ups in Indonesia. It can position itself
within the architecture of the business model, affecting all decisions and further modifications of the
business model, or it may take position outside the architecture of the business model, allowing modular
BMI regarding environmental sustainability. Together with the conceptualization of Stubbs & Cocklin
(2008) who advocate a stakeholder view and value driven approach to business models for
sustainability, the anticipation has arisen that start-ups on expressing inherent sustainability values are
likely to benefit from architectural business model innovations regarding sustainability practices. Start-
ups expressing mainly economic and brand related values are anticipated to demonstrate modular
business model innovations regarding sustainability practices.
It was expected that the cases with sustainability values would demonstrate a more radical BMI taking
sustainability practices into account. This is observed, both <case 1> and <case 3> are deliberately
concerning the environment as a stakeholder of their company. Without a healthy environment, their
business will deteriorate. The business models that are scrutinized for this study did not reveal an
adaptive BMI regarding sustainability practices and <Case 1> could even be argued to be a modular
approach. It is, nevertheless, classified as an architectural approach due to the chances that emerge for
them following their environmental friendly service. The collaboration with a local CSR company is
offering their product to low-income farmers, a collaboration due to the environmental value of the
start-up. An adaptive BMI means that the innovation is not only architectural of nature, it should also
be new to the industry. <Case 1> and <Case 3> are demonstrating to take environmental sustainability
into account for multiple business model subsystems, for both cases, the environmental sustainability
value is embedded and achieved through the service they deliver. Nevertheless, the orientation of the
start-ups towards ecology may still be characterized as eco-open rather than eco-dedicated (Schick
2002), advances towards environmental sustainability and BMI may be achieved by transforming the
ecological orientation of the start-ups, possibly resulting in more innovative business models. The need
to efficiently utilize environmental resources has led to innovative technologies, leveraging market
potential. The business model in the case of <Case 1> and <Case 3> is complementary to the product.
Boons & Lüdeke-Freund (2013) have described business models as market devices supporting
innovative technologies, but linking dimensions of the business model to be aligned with the sustainable
development mindset. Likewise, a start-up in Indonesia that was without the reach of this study has
been noticed to promote adaptive BMI regarding sustainability practices. This start-up operating in the
73
agricultural sector, connects farmers with investors through a smartphone based platform. This platform
allows investors to buy seeds, which will be planted and nurtured by the farmers, after which the
farmers, investors and start-up share the profit. Introducing ways of conducting business that have not
been present before in the country.
The two cases that have been examined on the “brand, economic- related values” dimension were
expected to demonstrate modular BMI with regard to environmental sustainability. In the reach of their
BMI for environmental sustainability it can be confirmed that this is the case. The innovations of their
business model in this sense do not emerge from the intrinsic value to practice environmental
sustainable, nor does it affect their business when they are not. The ecological orientation according to
Schick (2002) of those cases are located somewhere on the spectrum between eco-open and eco-
reluctant, with <Case 2> located slightly more to eco-open and <Case 4> located slightly more towards
eco-reluctant.
The cases have been selected with respect to two dimensions, the value dimension and the development
dimension. Comparing the companies on the development dimension has not revealed any major
difference in approach to BMI. It might be expected that the start-ups who have their products
commercialized and are yet in the growth phase have a better view of the market and are prone to have
adjusted their business model in response to market demand. It is, however, interesting what was
observed. What comes forward from the case of <Case 3> is quite interesting: their market does not
seem to require sustainable practices regarding the environment, whilst it would be expected to be
especially relevant for the agriculture industry. However, one should realize that farmers in Indonesia
are working in fairly traditional fashion, are generally not familiar with technology and care dominantly
about increasing profit for their low-value products. Neither did any of the other cases mention an
increased customer demand for sustainability practices by the company. This passive attitude regarding
the environment is likely to be a result from the low perceived environmental awareness in Indonesia.
<Case 1> is serving a similar customer segment as <Case 3>. <Case 1> performs sustainable branding
in order to reach its customers, it could be the case of course, that longer presence on the market will
encourage the firm to withdraw from sustainable branding for its customer segment.
Additional to the main objective of exploring the ways start-ups incorporate sustainability practices in
their business model, several barriers have been identified. Next to time scarcity and survival priority
inhibiting attention for sustainability practices, conservatism in the market has been mentioned as a
barrier towards sustainable branding for environmental friendly innovations. The investors that are
attracted to the platform of the additional start-up described above are mainly international urban
investors, like the investors of <case 3>. It may be argued that this is a result of the low awareness and
concern about environmental issues within Indonesia. Moreover, the conservative market in the agri-
and aquaculture also demonstrates a long way for Indonesia to persuade environmental awareness in all
layers of society.
6.4. Practical implications

This study has been executed in order to provide guidelines for other firms in similar situations and to
enhance the adoption of sustainable business models of start-ups. Various examples from previous
published literature have been presented and additional sustainable practices have been developed that
suit the specific characteristics of technology start-ups. Founders of technology start-ups should
consider their motivation to become an environmental friendly enterprise and may be inspired to adopt
some of the mentioned practices as came forward in the third literature review of chapter 2. In section
2.2.2 and figure 4 the business model archetypes of Bocken et al. (2014) are presented that provide
guidelines for enterprises to adopt sustainable business models. These guidelines are evaluated and
extended for start-up companies in section 2.3 and figure 7, which proposes environmental sustainable
practices to be employed by start-up companies. Moreover, start-up founders in developing economies
like Indonesia may take notice of the practices that are currently performed by the cases presented in
this study, which are extensively presented in Chapter 5. Also they may reflect on their ecological
orientation as described by Schick (2002), in order to advance their progression towards sustainable
practices.
An important stance that comes forward from this research is that the position of environmental
sustainability within the business model is essential to transform the business into an environmental
friendly enterprise. Many ways of including environmental sustainability in the business model are
possible, modular updates to the business model do not require a one hundred eighty degree turn around
of the business logic and are still beneficial for the environment. Nevertheless, allowing environmental
sustainability to take place in the architecture of the business model will affect all facets of the business.
Founders of start-ups should be encouraged to be creative on their business model designs in order to
monetize the environmental sustainable attitude.
From a nation-wide perspective there is a lot to gain on the perception of environmental sustainability
as well as on the regulatory framework to support sustainable developments in the country. Regulatory
frameworks to enhance the adoption of sustainable practices will stimulate or even enforce enterprises
to take action. It was beyond the scope of this thesis to give an in-depth analysis into this area, but it
nevertheless has drawn the attention.
6.5. Limitations
As described in the methodology in chapter 4, the research has been conducted in five steps. The first
step involved a literature research on business models, business model innovation, business models for
sustainability and start-up related sustainability practices. The extensive body of literature has served
as a means for proposing sustainability practices to be adopted by technology start-ups and provided
insights regarding the characterization of business model innovations concerning sustainability
practices in the business model. However, due to bounded rationality it might be the case that relevant
literature has been missed.
The second step involved the analysis of the context of the cases. As the cases were selected in
Indonesia, it was important to sketch the structural, cultural and political environment. However, this
analysis has solely been conducted by desk research and data sources were fairly limited. Moreover, it
has given only a brief outline of several factors perceived important by the researcher.
The third step involved the case selection. Prior to the field study, a list of requirements to distinct the
cases on the different dimensions has been set up to assure theoretical sampling. However, obtaining a
pool of start-ups to choose from was absent. Eventually, the two cases in the disengagement phase were
brought forward by the incubator of ITB and the two cases in the growth phase were the only two cases
that replied to my proposal. Three out of four cases have proven to fit the study very well, however
<Case 4> is somewhat deviant in the sense that they do not state environmental practices in their
business model nor branding position. Nevertheless, it provided insights in sustainable practices that
start-ups can effectuate, and is therefore chosen to remain in the study. Moreover, if there would have
been more time to approach companies in the time spent in Indonesia, other start-ups who employ
sustainability practices in their business model could have been approached to enrich the data.
The fourth and fifth step of the study involved the case studies and cross case analysis. For the case
studies, the initial plan was to conduct interviews in two person teams. This proved, however, not
feasible and might have affected the knowledge obtained during the interviews. Getting in touch with
the right person of the start-up was not too difficult, all CEOs or co-founders that replied have shown
great collaboration and willingness to talk at the moment of interview. However, establishing an
interview at the first place proved to be difficult as well as the chance to ask follow-up questions.
75
Therefore, most of the data used in this study comes from the first interview with the start-ups, whilst
follow-up interviews would have provided a wider variety of factors and a deeper insight to the
motivations for certain decisions.
For the data analysis, the business models of all cases have been described in the ontology of CANVAS.
This ontology was chosen to enhance the practical usage of this study for Indonesian entrepreneurs, as
this is the most adopted ontology in Indonesia. However, this ontology is mainly focusing on economic
gains and how to penetrate the market. The firm-centered perspective of this ontology is neglecting
stakeholder values and the wider effect on the business ecosystem. This neglect leaves little room for
evaluation of sustainability practices. The emphasis of Doganova & Eyquem-Renault (2009) on the
business model as a market device, demonstrate that it is not always makes sense to pin all elements of
a business model onto a rigid frame. The ambiguity of some parts of the business model may be rather
intangible and are benefiting from multiple interpretations. “When a business model serves to build
linkages among actors that are necessary to successfully market a sustainable product or service, various
elements being open to multiple interpretations is an asset rather than a problem” (Boons & Lüdeke-
Freund 2013, p.17).
6.6. Future research

Without doubt, business model innovations to enhance the adoption of sustainable practices by new
firms is an important, yet insufficiently researched area. Therefore, the main contribution of this paper
is to address this gap and to provide an overview of sustainability practices taken into account. The
context of Indonesia has been a very interesting work field; however, it may be enchanting to explore
the practices of start-up companies within a developed economy. Juxtaposition of the two studies may
provide valuable insights in how to incorporate sustainability practices in the business model.
Thus, a first guiding question is:
. To what extent do technological start-up companies from different

backgrounds accomplish to deliver sustainability through business model
innovation?
In part this question is taken into account by the design of this study, a complementary study in another
context may reveal interesting antecedents or inhibitors towards sustainable development. This comes
from some of the limitations in this research and leads to another field of interest for future researchers:
academics may look into the structural, cultural and political contextual factors influence the adoption
and diffusion of sustainability practices by new firms, taking an innovation-system perspective, namely
in developing economies in the South East Asian region. In this field researchers should take notice of
the theory developed by Stubbs & Cocklin (2008). An interesting guiding question that may lead future
research is:
What leading factors emerging from the national business system influence
the adoption of business models for sustainability within a nation of the
South East Asian region?
It may be wise to select a country to analyze these factors to clarify the scope of the paper, while the
research may serve as a rough example for other nations in the region. A more system-wide perspective
may lead to policy recommendations for universities or governments.
Another interesting approach may be to quantitatively assess the impact on the environment of different
business model innovation types for delivering sustainability, according to the typology of Foss & Saebi
(2017). A third guiding question that is proposed is:
To what extend can business model innovation improve the impact on the
environment of innovative start-up companies, and how does this relate to
business success?
In particular scholar can quantitatively assess the performance of start-ups employing sustainable
business models, employing environmental impact assessment techniques as described by Canter
(1996) and Glasson et al. (2013). This may reveal which identified practices lead to the desired
environmental outcomes, and which do not.
77
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APPENDICES
APPENDIX A – Tables on the contribution of literature to business models of sustainability
Author Article Theoretical Outcome Key Findings related to sustainable BM concepts
(Stubbs & Cocklin 2008) Case-studies on two idealized Organizations adopting a SBM must develop internal (1) Sustainability should be a strategy in itself
sustainable business models: Bendigo structural and cultural capabilities to achieve firm- (2) A stakeholder view of the firm over a shareholder view
Bank & Interface Inc. level sustainability and collaborate with key (3) A SBM treats nature as a stakeholder
stakeholders to achieve sustainability for the system (4) Leaders drive the necessary changes
that an organization is part of. (5) SBM is system-wide and firm-specific
(Ludeke-Freund 2010) Literature review on the efforts on “A conceptual framework is developed that combines (1) Combining imperatives for ecological sustainability
business models for sustainability. transformational sustainability strategies, eco- with imperatives of business development to come up
innovation, the role of business models and pivotal with “sufficiency” “efficiency” and “consistency”
ideas about value creation with regard to strategies at the intersection
discrepancies between private and public benefits (2) Extended customer value will lead to a market pull for
from business activities.” (p. 23) ecological innovations
(Hall & Wagner 2012) Integrating Sustainability into Firms’ Quantitative approach to assess the link between Cross-functional based BMI have in general an improving effect
Processes: Performance Effects and the cross functional or modular based BMI and economic on the economic and environmental performance of the firm.
Moderating Role of Business Models performance, environmental performance and
and Innovation stakeholder pressures
(Schaltegger et al. 2012) Explore the opportunities of BMI for A framework for business model innovation is Key drivers that economically justify a business case for
implementing business cases for proposed as a means to strategically create business sustainability: costs and cost reduction, sales and profit margin,
sustainability cases for sustainability on a regular basis as an risk and risk reduction, reputation and brand value, attractiveness
inherent, deeply integrated element of business as employer, and innovative capabilities
activities
(Bocken et al. 2013) Development of value mapping tool for An adapted ontology that includes sustainability at “The value mapping tool assists companies in embedding
sustainable business models the root of the business model by rethinking the value sustainability into the core of the business model through an
proposition in terms of value created, value destroyed improved understanding of the value proposition. It supports an
and value missed. iterative process for analysing sustainable value creation
opportunities from a multi-stakeholder perspective.” (p. 493)
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(Boons & Lüdeke-Freund 2013) Combining literature on business models Normative factors that contribute to unfold the 1) Value proposition should provide measurable
with sustainable innovations sustainable potential of sustainable innovations. ecological value. Business-society dialogs must
balance trade-offs between performance and improved
social and environmental effects.
2) The focal firm must not shift its ecological burdens to
its suppliers or customers
3) Customers are encouraged to take responsibility for
their consumption
4) Financial model should account for ecological and
social impact
(Girotra & Netessine 2013) Emphasize the need to combine new Conceptual framework that encourages firms to think
technologies with business models that about BMI to foster ecological sustainability
facilitate sustainability
(Bocken et al. 2014) A literature and practice-based review on Eight archetypes that emerged from the triple bottom Eight archetypes: Maximise material and energy efficiency;
mechanisms enhancing sustainable line and enhance the implementation of sustainable Create value from ‘waste’; Substitute with renewables and natural
business model innovation BMs by practitioners processes; Deliver functionality rather than ownership; Adopt a
stewardship role; Encourage sufficiency; Re-purpose the business
for society/ environment; and Develop scale-up solutions.
(LAUKKANEN & PATALA Analysing Barriers To Sustainable Highlighting the effect of the innovation system on Identified barriers to SBMI:
2014) Business Model Innovations: Innovation the success of business model innovations for • Lack of strict legislative pressure
Systems Approach sustainability and identifying the barriers that hinder • Lack of economic incentives
implementation • Lack of awareness and understanding
• Lack of customer acceptance
• Attitudes and values
• Short-term profit maximization
(Abdelkafi & Täuscher 2016) Conceptual model of BMfS that Explains the relationship between a BMfS and the (1) Connecting the perception of the natural environment
describes the interdependencies between drivers for business cases. to business model decisions
firm, natural environment, customer and (2) Highlights the importance of the perception of the
decision maker natural environment for customer and decision maker
APPENDIX B – Questionnaire
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APPENDIX C – Interview protocol
Explanation of study
Sustainability in business is of increasing importance. International and national governmental
pressures as well as the changing consumers’ demand are requesting more effort from companies
regarding environmental impact. Therefore, it is meaningful to assess how companies are dealing with
this issue. This is especially interesting for starting companies, as they often lack an abundance of
resources and therefore have to be creative on this matter. This is why incorporating sustainability into
the business model might give a fruitful solution for these companies.
The business model is the core of the company, business models describe the core logic of how to
deliver value to customers and how to create revenues. Designing the business model with sustainable
values in mind can provide a holistic solution to the business’ sustainable ethics. Business model
innovation means the alteration of one of more of the components of the business model that changes
the way the firm conducts its business. A relative new body of literature is examining business models
and business model innovation regarding sustainability. Various frameworks are suggested and also
archetypes for sustainability within business enterprises have been developed.
This study is designed to gain insight into the current practices of young companies regarding
environmental sustainability, where and how do they incorporate sustainability into their business
practices and how can business model innovation help companies assessing sustainability. Naturally,
regarding the scarcity of resources and the potential of increasing their competitive advantage.
Therefore, four case-studies are conducted. Four different young companies are examined regarding
their business model design or innovation.
For this research we will select two start-ups that are in the process of designing their initial BM, one
company that explicitly pays attention to sustainability, and one that is focused on other, mainly
economic brand related, values to promote sustainability. We will also look into two start-ups that have
already an established BM and are innovating their business model. Again, one company wanting to
innovate their BM to take sustainable values into account, the other company is focused on other, mainly
economic brand related, values to promote sustainability. By this 2x2 design, depicted in table 15, we
are able to compare different practices to identify similarities and differences, opportunities and barriers
towards environmental sustainability.
Table 15: 2x2 matrix for case selection
Sustainability Economic, brand

values related values
BM design Case 1 Case 2
BM innovation Case 3 Case 4
Criteria for selection of cases (smart sampling)
In order to select appropriate cases, we have to ensure that the outcome interviews and observations
provide us with information that matches the research objectives of this study.
It is hard to define start-ups by numbers and profits, as the culture of the company is considered an
important factor for start-ups. In essence, a start-up is a new founded company that is designed to gain
a rapid growth (the aspiration to conquer the world with your company). Due to the small amount of
employees, they all have a significant impact on the performance and course of the company. So as it
is hard to define a start-up, it is also hard to pinpoint the moment when a company ceases to be a start-
up. However, every extra employee and every additional year will alter the original culture of the
company.
As the objective is to get insight into the drivers for sustainability for start-ups during the development
and innovation phase of their business model, the following criteria are obeyed:
To distinguish between the BM design phase and BM innovation phase, the next criteria have been set:
Criteria for BM innovation cases (AND):
- Made changes to BM in the last year
- Not older than 8 years
- Product/service should be on the market
- Technology related product/ service
- Experienced growth in market
Criteria for BM design cases (AND):

- Not more than one year on the market
- Technology related product/ service
- Still experimenting/ implementing components of business model
To determine if a company lives up to environmental sustainable values, the following indicators are
used for selection (list might expand, expansion still possible after observations within the company).
If a company does not have any, or not sufficient indicators for sustainability, it is classified as the
“economic, brand related values for sustainability” dimension.
Sustainability values indicators (AND/OR):

- Product made from sustainable resources
- Stated sustainability in their vision/mission
- Energy-efficient office/ flexible workplaces/ no office at all
- Considering partners on the basis of their influence on environment
- Separating waste
- Supporting employees in environmental friendly practices
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Confidentiality statement
From template (discuss with supervisors what you have to include):
Date: [Insert Date]

Project Title: [Insert Title]
Principal Investigator (PI): [Insert name, status/role e.g. professor]

Department of [Insert Department Name]
Delft University of Technology
[Phone number and extension; email address]
Faculty Supervisor (if different from PI): Student Principal Investigator (SPI) (optional):
[Insert name, status/role] [Insert name, status/role]
Department of [Insert Department Name] Department of [Insert Department Name]
Institute Teknologi Bandung Institute Teknologi Bandung
[Insert phone number and email]
CONFIDENTIALITY
[Insert a statement describing the extent, if any, to which confidentiality of records identifying the participant will be
maintained. See options provided under sample confidentiality statements]
Data collected during this study will be stored [insert details about how/where data will be stored]. Data will be kept for
[insert length of time data will be retained] after which time [provide details about the final destruction/disposal of data].
Access to this data will be restricted to [provide the names of those who will have access to data].
VOLUNTARY PARTICIPATION
Participation in this study is voluntary. If you wish, you may decline to answer any questions or participate in any
component of the study. Further, you may decide to withdraw from this study at any time and may do so without any
penalty or loss of benefits to which you are entitled.
PUBLICATION OF RESULTS
Results of this study may be published in professional journals and presented at conferences. Feedback about this study will
be available [include information about whom to contact, how to contact them and when feedback will be available].
CONTACT INFORMATION AND ETHICS CLEARANCE

If you have any questions about this study or require further information, please contact [insert Principal Investigator’s
name or the Student Principal Investigator’s name and the Faculty Supervisor’s name (if different from PI)] using the
contact information provided above.
Thank you for your assistance in this project. Please keep a copy of this form for your records.
CONSENT FORM
I agree to participate in this study described above. I have made this decision based on the information I have read in the
Information-Consent Letter. I have had the opportunity to receive any additional details I wanted about the study and
understand that I may ask questions in the future. I understand that I may withdraw this consent at any time.
Name: __________________________________________________________________
Signature: ______________________________________________ Date: ___________________________
Interview Guideline
An interview is an intelligent conversation between an interviewee and an interviewer. The objective
of the interview is to acquire information of the case and (personal) views of the interviewee.
Interviewees are often the owners or managers of the start-up/ SME, preferably they should be involved
in business model development and innovation. The interview doesn’t need to follow the guideline in
detail or in a prescribed order but the guideline functions as a check-list to see if the most relevant topics
have been discussed. An open interview check-list offers the opportunity to delve deeper in some
issues, while other might be marginally touched upon.
In this interview guideline we present topics that might be subject of the interview. Be aware that this
list not exhaustive and also it might be possible that not all topics can be dealt with or discussed in one
interview or with a specific interviewee. Also the order can be dependent on how an interview develops.
So don’t try to go the interview question by question but take care that there is an open conversation
and that only after a topic is exhaustively discussed use the interview topic list to address the next topic.
The topics follow the order of background information of the company and on the interviewee, a
discussion of the business model, and business model innovation, business performance.
At the end of the interview always ask if an additional interview can be done, either with this specific
interviewee of with another relevant, informed employee or manager. These interviews can also take
place via telephone, Skype or otherwise.
Remember to explain the objective of the research and the way we deal with informed consent (see
Deliverable 5.5. for details and the forms). With regard to informed consent make clear that we deal
with data in a confidential. Also at the end make clear that
• The transcript of the interview will be sent for validation.

• Together with the transcript there is a form for permission for usage of data for research and/or
for public communication (with disclosure or non-disclosure of the company name).
Topics to be addressed during interview.

Company background & environment (you can get much of this information in beforehand from the
web)
• Can you tell us a bit about your company?

o When started? Who are the owners? How many employees? Management structure?
Family business? Female managers?
o The formal position of the interviewee
o What industry? What markets (local, regional, national, international)? Who are the
main competitors?
o How does the company deal with changes in business (innovation) in general?
o Does the company have a strategy or a long-term vision?
o Why is the company valuable to the owner? Why is (s)he in this business?
Business Model
Can you explain how your business model looks like? Be aware that most entrepreneurs will not be
familiar with the concept of Business Model so try to ask this in an understandable way. For instance,
what is your daily business, how do you make money, what are your key activities?
• More specifically the following topics can be addressed

o What are the core products, services? What value do they have for customers? Market
segmentation? When the product was introduced to markets?
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o What are the core target groups? How are customer relations managed? Which
channels are used for communication with clients?
o How is the company position in the supply chain, value network? Who are the core
suppliers? How does the eco-system/ value network looks like?
o How do internal processes look like? Are they formalized and described? Are they
aligned with external processes?
o What core technologies are used, if any?
o How is the product priced? how about the costs?
Performance of the company
• Is the company profitable, doing well?

• How is performance measured within the company?
Business Model innovation/ development & effects
• Has the business model changed recently? What was the reason for this? What was the driver
behind the BM Innovation?
• Was (or will) the change in business model or business operation visible for the customers?
Did it change the value proposition to customer or customer related processes?
• What was changed? How did this affect the impact on the environment?
• How was the Business Model change managed? Was use being made of Business Model
methods (CANVAS and the like) or tools?
o Tools can be anything that the interviewee mention from spread sheets to consultants
that advised on usage of for instance Blue Ocean strategy tooling.
• In what phase is the BM Innovation/ development process at the time of the interview?
• Did the Business Model Innovation deliver the expected results? Was it successful? How was
the effect of BMI assessed?
• Did the BMI process lead to improved understanding or communication of BM?
Specify and direct interview towards environmental sustainability issues
• Discuss relation strategy and Business Model

o Keywords; environmental dynamism, entrepreneurial orientation, market orientation
• Discuss the sustainable practices of the firm which relate to the business model
o Keywords: sustainable initiatives, key-activities (day-to-day activities which involve
consciousness about the environment), partnerships in environmental sustainability
• The role of knowledge in BM innovation and sustainability
o Learning orientation, creativity
• Discuss relation of Business Model and IT (process, applications, IT infrastructure) and its
impact on the environment
Closure
• Ask for available and relevant documentation if available

• Thanks for the interview
• Arrange for the validation of the transcript
• Explain the rules and guidelines with regard to informed consent.
• Follow up interviews if necessary
APPENDIX D – Headlines of Interviews
<Case 1>
Interview with CEO and CMO.
The company is called anonymized and is operating in the agro-technical technologies development. The
company is established in October 2015 to develop the product to enhance the production of farmers in
Indonesia.
The product we are offering is called anonymized, the acronym of environmental control of monitor
plantation. The product is enhanced by a smart controlling system. It is one product but comprises of a
hardware and software system and a smartphone application. We are focusing on the controlling of irrigation
for the farmers. The controlling system is focused on a smart irrigation system. In Indonesia, farmers use
irrigation in a non-controllable, non-quantitative way. This means that the plants get more water than they
need and this excess of water causes a run-off of nutrition of the fertilizer. This fertilizer than runs off to the
village and pollutes their water. By using our irrigation system, we hope that farmers will give the fertilizer
in an effective way, so the nutrition does not run off and will be absorbed by the plant more effectively. This
will also make that the plant produces more fruits.
The focus of the business of anonymized is at this moment in anonymized, mainly in anonymized. However,
there has been interest from areas as anonymized.
Greenhouse farmers can directly buy the product from anonymized, or, if it suits them better, a farmer can
rent the hardware from the company.
It has so far been sold to the anonymized in anonymized (an area close to anonymized), which is a government
funded eco village. In here the technology could serve educational purposes. In here the product is in its
implementation process. anonymized is providing the whole package of selling and instalment of the product
as well as the service.
Concerning the competition, there are two or three other companies that are offering similar products, but
they do not offer the full package to the farmer. They only have the monitoring system or just have the
controlling system [anonymized]. However, in a competition for funding for start-ups, anonymized got
funding where the competitor did not receive any funding.
The vision of the company is to bring a new era of agriculture into Indonesia. As farmers in Indonesia still
use conventional technologies only. This is not very useful, both for production and for the environment.
Conventional technology uses many chemical fertilizers and the irrigation is not monitored. This often
overflow of irrigation makes the nutrition running off to the river and makes it look like the plants need more
fertilizer. Thus farmers will give more fertilizer. Farmers need more education. We hope that our company
can help them to understand how the plant works, how they produce fruit and also help the environment to
be more productive for the next harvest. The environmental issue is included in the product itself. Moreover,
we are concerning to make the new generation of farmers more interested in technology. We want to attract
the young generation to start farming by using technology.
Nowadays, farmers mainly emerge from family’s that are already farming. They learn from their parents
how to do the job, and the problem is that when the children go to school, they [the children] don’t want to
be a farmer anymore. The company wants to show that farmers do not only work in the field with the dirty
work but it can also include technology.
BUSINESS MODEL
As we are incubated in the LPiK incubator, we are educated to use the business model canvas to design our
business model. The customer segment is the farmers in anonymized who are using greenhouses for their
harvest.
The value proposition is to bring the new era of farming to Indonesia. Environmental sustainability is
included into the value proposition by this, also because they concern about water management and
91
electricity management. The product will turn of the hydraulic pump that is used for the irrigation system
automatically, where the old habit was to turn it off manually, this way saving energy and water.
We engage in partnerships with other farmers in anonymized, a government research body in agriculture and
we are planning to make one of the organizations a role model to show other farmers our product. [Like
endorsement]. Moreover, we have a partnership with a store in Bandung to obtain the hardware, selected on
basis of price/quality.
Regarding consumer relationships, we try to endorse the customers that they save water and energy by usage
of the product, we use it as a source for branding as well. The product is cost effective and benefitting for
them.
We put the issue of sustainability into our business model after research, it is a kind of innovation that
emerged after researching the business model. It was after the research that we defined the value proposition.
INTRINSIC MOTIVATIONS
CEO founded the company because of his academic background, which motivated him to enhance the [often
poor] production of farmers in Indonesia. He saw that there was a lot of room for improvement, as farmers
use mainly traditional approaches and technology is not implemented yet.
CMO went into company because of the challenges that come with start-up businesses.
<Case 2>
Interview with founder and CEO anonymized, anonymized
anonymized established the company since September 2014 and the project took off in September 2015. It
got rewarded by the minister of research and technology with a grand on Tech Business Incubation. This is
a two-year programme facilitated by LPiK, the incubator of ITB. That is how we became a tenant of LPiK.
During that project, we submitted some patents. Not only for local one, but also for international patents.
We submitted the UK design and utilities patent, and for Indonesia we filed for design and innovation patent.
The grand takes a two-year process and we are still in that trajectory.
We have six people including me working for the company. I am an aeronautics engineer and there is also a
mechanical engineer [research assistant of ITB], furthermore we have someone on the telecommunication,
electrical and a person from Jakarta on the operational support who is more concerned about the practical
issues of the company.
From a formal perspective, there are three phases of a business. The first one is the R&D phase, including
patents and the designs. The second phase is the manufacturing phase. The third phase is about sales and
marketing. Some businesses don’t care about patents and go straight into manufacturing. We consider
ourselves a bit crazy as we have to go through these three phases. We are now more or less in the second
phase. We hope to commercialize our first product several months from now.
Our business model is to provide a solution of the lowest cost, easier to use, and quicker to deploy the internet
infrastructure.
We offer a helium balloon for internet and our long-term strategy is to provide an array of solutions from
space technology, but for that we need a bigger capital as it is highly intensive in terms of technology and
terms. We start with the helium balloon system which will enhance the internet and telecommunications
infrastructure that will be provided from the internet association. We also have a contract with the Indonesian
Internet association
BUSINESS MODEL
For the key partners, we have the Indonesian internet association and also the suppliers. At the moment we
only have intangible assets, rather than tangible assets. That is why our key partners are consisting of
suppliers of our materials and technology. Also the government is a key partner for us, as we are lucky
enough to receive supports from the ministry of informatics and they are also one of the stakeholders of our
business.
For the key activities, our consideration is the providing of hardware solutions. We are developing the
product ourselves, assembling everything ourselves, but for the components we have suppliers.
The key resources we get from the suppliers and also from the collaboration with ITB LPiK. We want to
leverage our collaborations through the triple helix concept.
For the value proposition we have a vision to be considered as the provider of the lower cost and the quicker,
faster deployment and easier to use of the internet helium balloons.
We have a matrix of a potential solution. For providing the coverage of telecommunication for internet there
are balloons aircrafts and drones. We believe that the helium balloons have some advantages over other
potential solutions.
We target the B2B market. That is why our customers are also our partners. The APJII Indonesian internet
association is included in discussions to sharpen the business model on a weekly basis. We are speaking
about budgeting of our product deployment.
As we will offer the helium balloons to some cities, the government is also our customer.
The supply chain and the transportation is one of the biggest consideration points at this moment and gets a
lot of attention.
The customer segment is business to business. Telkomsel (Indonesia’s biggest telecommunications provider)
could be a potential customer, as well as the internet association. Not only for the internet to deploy and
improve the connectivity in rural areas, the product can also be used for high density areas.
The costs we bear are mainly for the hardware, the team, the patents and the legality.
Our key-activity is the design of the hardware, we pick potential suppliers and potential manufacturers and
they will provide us with the product. At the moment we are still doing this ourselves.
VISION
Indonesian internet connectivity is below the 50% of the total Indonesian population. We first want to deploy
more internet connectivity and improve that infrastructure. After that we have some ideas about the hardware
and software solution. When the balloons are in the sky, it can open opportunities for cameras or sensors on
the balloons that can provide the city with more information.
We almost finish the second and final year of the reachtech incubation and have to find a way to
commercialize the product after that. That is why we have a meeting every week to sharpen the business
model. What we are considering in that discussion is how to do the budgeting and the technical issues. The
customer segment is the segment of the business model that changed over time, the helium will be a solution
for the government as a sort of smart city programme. That is why we deploy cheap internet access.
Key activities (designing the helium balloon), value proposition (providing cheap and quick internet
solutions) and revenue streams stayed the same over time.
SUSTAINABILITY
Regarding environmental sustainability, our company is considering it in how to compose the product and
in how to enhance the lifetime of the product, but to be honest there are many problems we have to tackle
first. Probably we will regard it in how we produce the product, which materials will we use, and see the
product from start of the manufacturing to the decomposition of the product.However, even the patents have
some struggles. Also in the manufacturing we have to see how to scale up and how to make it effective. For
the sales and marketing we have to figure out how to generate cash-flows. Probably after we got some
investment of the helium balloons and after we scale up the problems will be different. For now, survival
and scaling is the most important.
<Case 3>
Interview with CEO, anonymized
93
BACKGROUND
The company was established in 2013 and had the first commercialization mid 2014.
The founder studied biology and started a business in catfish in his second year of college. It was the time
that he realized that the fish farming industry had a huge problem, which was the feeding cost. The feeding
cost is the biggest cost in agriculture for fish farmers and is mainly done by labour force. Labourers feed the
fish by hand and it is totally uncontrolled. You can stick to processes, develop procedures and standardize
the process, but it is still depended on mankind. Sometimes it happens that the labourers steal the food and
sell it to the other farm and you can’t keep being there for 24 hours. In the whole agriculture sector there is
not much done with technology, while in the other sectors there is a lot of adoption of technology. There has
been a fast technology adoption rate in the past two decades, and I think that in agriculture we keep doing
what we did in the last century and it is time we catch up with this.
The founder came up with the idea of maintaining the feeding remotely from your phone. The basic idea of
anonymized is just SMS-based feeding. So you send a message to the machine and the machine will feed the
fishers. But along the way they saw that the SMS system is not scalable. If you have hundred farms and you
need to send the message to all hundred farms, it is not really efficient. This was actually in the time that the
application business started to take off. Than we built the anonymized, which is the machine built by
anonymized that can feed the fishes remotely, we can control it by the application from the smartphone. It
also sends all of the information to a cloud, so you can monitor your feeding amount and feeding time from
the cloud. Along the way, eFishery has also built a sensor, the m-sense fishery appetite and it monitors the
fish’s appetite.
BUSINESS MODEL
We have used the business model canvas in the beginning. The main value proposition is to improve the
feed efficiency. We call it the feed conversion ratio. How much feed do you need to produce one kilogram
of fish, that is the ratio? Our value proposition is to reduce this feed conversion ratio. If you need less food
to produce the same amount of fish. To do that, we sometimes reduce the feeding cost and sometimes we
are increasing the production [key activities]. By reducing the ratio, we are increasing the [profit] margin for
the fish farmers. Additionally, we provide the value proposition of remotely controlling your business
anytime and you can get the real time data while you don’t have to be there. That is mainly data monitoring,
but if it is something that the fish farmers can make more money from that then that is the idea. It should be
noted that we deal with a very conservative market, when we think of a low value product. Farmers only
understand the value of a product in “money-language”, how much money can they save or make. So that is
also part of our value proposition.
For the revenue streams we have two pricing alternatives. The first one is to sell it, so we have customers
who buy it for 750 dollars including the fee subscription for the software for two years. The second is to rent
the hardware, we have a rental system in which the farmer only pays 30 dollars per month, we call it some
kind of software package in which they rent the hardware as well.
On the long-term we also gather the data from the farmers, so we are trying to find a way to monetize that
dat. Let’s say we can get the data and we can analyse the credit worthiness of the fish far, we can connect
the data with a financial institution. We then charge the transaction and transcription fee for access to the
data to the other customers like banks. We are currently doing that on a small scale.
What we are doing on daily basis is developing our software. We have in-house engineers to maintain the
software. We have a field sales team and we work with distributors. Most of our work is centralized. In the
manufacturing site we used to assemble the product ourselves, but we are shifting up to assemble it by using
contract manufacturers. We also handle the aftersales, we do the maintenance, replacement and repair the
product.
SHIFT FROM IN-HOUSE TO OUTSOURCE
Initially we work with suppliers and vendors. We have lots of projects to do to complete a product. We need
160 parts to assemble the product, so we deal with lots of vendors and suppliers to ship it to us. Then all of
the small parts were assembled by us, we do the electricity parts, we do the solder, the mechanical part and
the painting, then we package it and do the quality check. Obviously it is hard work and we are not good at
it, it is not our core expertise. We don’t have mechanical engineers, so typically the lead-time was too long
and we cannot scale as fast as we can scale up in other parts of the business, which is using the sales and the
software. The assembling keeps lagging and holding back the business. it was a bottle neck in our operation.
We decided that we need a good partner, one who is understanding what they are doing and then they will
have a good network in which they can find the good suppliers to them, giving them the capabilities to
develop the product.
SELECTING OF PARTNERS
The partners have to understand the business; they have to know where we want to go. It is important for us
to find a long-term partner. When discussions with the potential partner are held, it will go about what we
want to do in the future 3-5 year, and if they are willing to be a part in that and willing to take investment on
their own for them to grow with us. That is the initial and basic criteria that we have. If they buy our vision
and they believe in what we are doing, then that is the basic. Secondary, is of course the expertise, we see
their portfolio about how they work and about their expertise in building similar products. We do due
diligence as well, seeing their factory, their employees and their partners. So basically we do that to see
whether they have a strong expertise. The other criteria is the networks that they have. We want to scale up
and if we need some other parts, then networks or suppliers are also important. We are considering the whole
supply chain.
CUSTOMERS
We target small and medium farmers because their adoption rate is high and in terms of market size they are
the biggest. They comprise 80 % of the market. We also deal with big corporations, who own a company
arm in agriculture, they are strategic partners; they are the biggest feed manufactures in Indonesia. If they
take up the product, then they can be a partner in the future as well. This will build on our network. Also we
sell to the government.
ENVIRONMENTAL SUSTAINABILITY
We see environmental sustainability on a global scale; clearly we produce food from the environment. If the
environment goes bad, the water goes bad and the fish goes bad. When the fishes go bad, we don’t have any
business. basically the environmental sustainability is aligned with what we are doing, what is good for the
environment is good for the business. That’s why even in our value, sustainability is embedded and for us
that is aligned with environmental sustainability. What we are trying to do, one of the biggest polluters is
the feed, if we can reduce overflow of feed in the water, then the quality of the water will improve and the
fish will be better as well, so it becomes more profitable. If it is more profitable we can sell that to the
farmers. The environmental sustainability is embedded in the growth and future growth of the company.
Moreover, we have received investments from companies as anonymized and anonymized. To obtain these
investments we make use of environmental friendly branding. These investors find this important and thus
it makes sense to use it as a branding component. On the sales side of our company, the fish farmers, they
only care about profits, so we are not using it as a way of branding to sell our product.
<Case 4>
The CEO, which is a graduate from ITB on industrial engineering and has extensive experience in the fast
moving consumer goods business, founded the company SnapCart in 2015. It then started off with 7
employees, launching in Indonesia, they are now physically present in three countries and have around 65
employees.
95
anonymized is focussing on B2B, with the larger part focusing on enterprise B2B. It looks like we are running
an app, which is basically the cashback app. It gives you cashback if you upload your receipt. But that’s not
how the company monetizes, the way they monetize is in extracting the information from the shopping
consumers directly, crowdsource data that we extract and then they sell the data to brand related businesses
like Unilever, P&G. L’Oréal etcetera. From the receipts data there is a lot of information they can get. If you
have a smartphone you can follow the individual: what is the shopping behaviour, where do they shop, are
they actually multisource to different retailers, what is the content of their basket, are they switching between
different brands? If we aggregate the level, we can communicate what’s going on in the market. The
advantage of this way of getting data is that you can get the data in a much more real time matter.
The biggest competitor in their field is anonymized, whom get their data in the conventional way, which
tends to be manual: from house to house to interview people, use surveys, going to the pantry and see the
stuff consumers are buying. This is not scalable enough, they can only get to a number of households and it
takes time to get this data back to the brands. The real time data provision for the client is what really sets
us apart and gives us advantage. That’s basically the model of SnapCart. The fact that it is b2b it is a much
more profitable way of getting the business in, you can make sure that is not burning too much, but then you
can already monetize from the data from a sufficient sample to represent the market.
There are offices in Indonesia, the Philippines and a representation office in Singapore. We are looking into
expanding into other markets in South East Asia as well as markets outside of Asia.
anonymized is a company that has never been set up to stay within one country, Indonesia. The nature of the
business as it is, is to expand to multiple markets. The expectation for us is to be present in many countries,
as well as for our customers which are mainly multinationals. They expect us to represent a big part of Asia.
We look into market expansion based on three things, so one is the market size of research. What is the size
of the market research business? Second is accessibility, how well are we familiar with the market, hence
we can actually get the business running. Third is the technology factor. We develop our own technical tools
to read the receipt. Launching in brazil would be easier than launching in Japan, as japan has a way different
alphabet where it’s not yet in our library.
Many data science capabilities are centralized in Manilla. The chief data officer is of Philippine origin and
based in Manilla. The chief technical officer is Syrian and based in Jakarta, but works with a team of
developers in eastern Europe, because of the skills that are available there [and not yet in Indonesia].
BUSINESS MODEL [INNOVATION]
So I think what is important to note, we have a very clear product pipe line of what products we want to
launch. However, the business model stays true, which is we are focusing on real time data. When we launch
we only have two clients, and then we focus on delivering modules. If you look into our webpage, then you
see the services which we provide. One is called anonymized, which stands for customer analysis and retail
tracking. So it serves as an online dashboard to which the clients get access to. Depending on the modules
they want to see and the modules that they pay they have full access to that data and their performance. So
it can be ranging from just simple brand share performance to the most complex one would be price analytics
or price sensitivity, so you would see the movement of prices of different brands and how that correlates
with brand performance. From the own brand and competitor.
After a while a new service was introduced, but the source is still from the app and the receipts that we
collect. The second service is called anonymized: targeted audience-based surveys and questionnaires. Not
all of the insights that the clients want can be answered by just the receipts data. For example, if I get your
receipt, right now you are using Pantene and then you change to sunsilk, I don’t know yet why you change.
I still need to ask you a question of why you are having this behavior. That’s why we allow brands to target
you as a part of a larger customer segment to address for a questionnaire to ask questions specifically why
you change that behavior. It is more ad-hoc and there are specific questions brands would like to see
answered. It is a survey within the application.
This year one more app and one more service will be launched. The new service is called anonymized and
stands for offline purchase tracking and insights. A lot of brands invest in a lot of media, especially social
media and OPTI is giving insights in the purchase impact factor of the digital advertisements.
The new application is to complete anonymized. 60% of the trade transactions are happening in traditional
trade, not using any receipts. The question is how can we extract data from these traditional stores. This new
app is going to track that information. It will be giving a pre-set system for storeowners to use a smartphone
based app for free. They can use it to actually record transaction, so they can record the inventories coming
in. When they have a transaction they can scan barcodes and can record this as well. For the storeowners it
will give them benefits as they can record and manage their inventory. The benefit for anonymized is that
the company can track all the transactions that are being done in that store. It is going to communicate to the
cash-back app that we have. These two platforms will communicate to each other, so the store owners can
also use the cashback feature of the application while they don’t have real receipts.
The customers are also the key partners, that is why it is twofold as well. Our key partners are the users in a
way but at the same time the brands are our partners. For example, from an acquisition point of view the
brands helping us to acquire users as well. They do advertising on their products to communicate with
customers that they can get a cashback through the application. That helps us to acquire users. But there are
other key partners that are specific for example the google and Facebook publishers can be our clients as
well. So those are the key partners that we see. Our competition can be our partners as well. anonymized as
that they are the market research company because they are very strong in TV ratings, all of the data comes
from anonymized. We can cooperate with market research agencies as well because we see possible
cooperation in specific fields we need help in. we compete from the purchase information site, but for media
we can collaborate with them.
SUSTAINABILITY
We are working with big established companies who have that already. They have this kind of perspective;
in a way we are driven to that as well. The good thing of technology driven companies is that we are not
creating products, we are not manufacturing anything. That sustainability part is not going to be an integral
part of the business anyway. But we always look into the future, for example let’s say receipts is going to be
the core of our business, can this paper based receipts be transformed into something that is more non-paper
like electronics, which can be something like an angle we are drawn to. So for example, we want the store
owners to use our app, because we don’t want them to actually go acquire a system which requires them to
print receipts. So that’s something what we are trying to do, we believe that the future is going to something
like that anyways. Everything is going to be electronic and we are trying to also drive that thing.
One of the things is that it is driven by the environment of clients we are working with, we choose to not
rent a house and then build our office there. We choose to have a grade A building where they have the right
system in place anyway to ensure that sustainability is affected. So I am not saying that we are not focusing
on it, we believe that because of the bm requires us to be similar with the companies we are working with.
Basically it forces us to kind of have that same thinking.
We do not require our employees to be in the office on a 9 – 5 basis. They work on an assignment basis in
which they have to complete certain parts of work within a pre-set period of time. If they want to work from
the office or from their homes is up to them. The office is always open and provides the speed of internet
that is often required for the proceedings of our employees, but if they want to work from home or wherever
that is fine.
As we want everything to be electronic, we try to reduce as much waste as possible. When we sign
documents, can we change it into an electronic way of doing this. The barrier that comes from the clients,
not from our side. There is a platform called DocuSign, people don’t have to sign on paper, they can use the
electronic platform. The problem is that certain clients require us to use paper based signing. That is
something we cannot enforce, because that is what the clients want. Internally it is not an issue, because it is
hitting two birds with one stone, cost saving and also benefitting the environment.
97

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The Role of Sustainability in Business Model

Innovation of Start-ups in Indonesia

THE ROLE OF SUSTAINABILITY IN BUSINESS MODEL INNOVATION FOR STARTUPS - AE GEELHOED

In partial fulfilment of the requirements for the degree of

at Faculty of Technology, Policy and Management, Delft University of Technology,

Keywords: Business Model, Business Model Innovation, Environmental Sustainability, Start-Up,

Chairperson: Prof. C. van Beers Economics, Technology and Innovation

An electronic version of this thesis is available at https://repository.tudelft.nl/.

Table A: Case Selection

Initial development start-up 1) <Case 1> 2) <Case 2>

Commercialized products 3) <Case 3> 4) <Case 4>

1.2. Research problem

1.3. Research objectives and expected deliverables

1.4. Research Questions

How do technological start-up businesses in Indonesia apply business model innovation in

Figure 1 Research framework

Table 1 Steps undertaken in this thesis

Aim Input Contribution to RQ

Sustainability Economic, brand

1.6. Structure of this thesis

Figure 2 Flow of thesis

2.1. Literature review on Business model and Business model innovation

Figure 3 Business Model Innovation Typology (Foss & Saebi, 2017)

2.2.2. Business models for sustainability

Author Contribution to sustainability Scope of sustainable

2.2.3. Drivers and barriers towards implementing sustainable business models

Figure 5 Identified internal drivers (Schaltegger et al. 2012)

2.3.2. Connecting the sustainability start-up literature

Figure 7 Ideas for the implementation of BMfS for start-ups in Indonesia

3.2. Environmental awareness in Indonesia

3.3. Social culture

3.4. System-wide factors: legislative and institutional environment

An important instrument to raise environmental awareness is education. Environmental education is

4.2. Research design

Table 5 Steps undertaken in this research elaborated from step 3

Aim Input Result

Step 3, Case selection:

Step 4, Case studies:

Step 5, Cross-case analysis:

Initial development start-up 5) <Case 1> 6) <Case 2>

Commercialized products 7) <Case 3> 8) <Case 4>

4.3. Data collection and reporting of the individual case studies

Table 7 Research sheet on case studies

Responsible researcher(s) Anne Evita Geelhoed

Table 8 Codes used to analyze interviews

Background economic motivation lack of technology revenue stream

5.2. Description of the cases

5.2.1. <Case 1>

Conceptual BM CANVAS Company’s position

5.2.2. <Case 2>

Conceptual BM dimension CANVAS building block Company’s position

5.2.3. <Case 3>

Selecting the partners

“The environmental sustainability is embedded in the growth and future

Conceptual BM CANVAS building Company’s position

Conceptual BM CANVAS building block Company’s position

Value Chain Key partners Clients as well as application users

5.3. Cross-case analysis, comparison on both axes

Conceptual BM CANVAS building <Case 1> <Case 3>

Conceptual BM CANVAS building <Case 2> <Case 4>

Table 14 Words spoken by each company about environmental friendly practices

<Case 1> <Case 2> <Case 3> <Case 4>

“We do not require our employees to be in the office on a 9 – 5 basis. They

CEO <Case 4>: “As we want everything to be electronic, we try to reduce

Signature: ____________________ Date: _